Interplay Not For SaleTitus Friday issued a statement to the markets that it had decided not to sell its stake in Interplay, meaning an acquisition of the US company can be ruled out, at least for now.
According to MCV the two bidders for Interplay, believed to be THQ and PCCW, withdrew their offers, prompting Titus to issue a “not-for-sale” statement, apparently to save face. As of June 12, Titus owned 46.5% of Interplay’s common stock, and would thus have to agree to sell its stake for any potential acquisition to take place. Interplay’s value to Titus exceeds its paper worth, as the French company can consolidate 100% of Interplay’s revenues despite holding only a minority stake. A sale would therefore cause Titus to shrink dramatically — something that would be unlikely to please the French stock market.
The proposed sell of the stock stems from an ongoing love hate love relationship between both Titus and Interplay. In a registration statement filed Jan 26 with the SEC, Interplay said it had been notified by Titus that the French company believes it is no longer obligated to fund the $5 million line of credit it extended to Interplay in April 2000. This presented Interplay with the challenge of raising funds through debt or equity financing, the latter of which would further dilute Interplay’s shares. The key problem is that if Interplay defaults on its credit line and Titus is forced to pay on its $20m guarantee, a large chunk of Titus-owned preferred stock will convert into common stock, giving Titus about 75% ownership of Interplay and diluting the American publishers shares still further.