THE computer games maker Codemasters is close to securing a cash injection after expansion plans and tough trading left it short of money. The company behind Operation Flashpoint, The Lord of the Rings and Colin McRae: Dirt 2 will shortly announce a new investor as part of efforts to rebuild its balance sheet, writes James Ashton.
Existing backers Balderton Capital and Goldman Sachs will also inject new funds but their investment will be heavily diluted by the restructuring. They bought out the founding brothers, Richard and David Darling, in 2007 and geared up the business with £52m of debt with an eye on a stock-market flotation.
Warwickshire-based Codemasters is Britain's last independent computer games maker. The Darlings set it up in 1986 with their father, Jim, when they began creating games for the Commodore 64 computer.
Balderton and Goldman Sachs and partners have invested almost £100m in the business between them in an attempt to turn Codemasters into a global player. They recruited Rod Cousens a veteran from Activision, to lead the expansion, and struck an American distribution deal with Warner Brothers. Codemasters was hit by tough trading last year. Rival games producers such as Ubisoft have reported problems as the industry slows down owing to the lack of new console launches.
Codemasters' sales in the past six months are understood to have hit a peak of £100m, compared with £70m a year earlier, helped by the success of Formula 1 and Ashes Cricket. In the year to June 2008, the last set of filed accounts, Codemasters reported earnings of £7.9m on sales of £105m.