Adelaide-based game maker Imagine Entertainment has been forced to sell two of its popular board game titles to a Canadian toy company for $24 million after Westpac reduced the company’s banking facilities so drastically that corporate activity practically stopped, co-founder Shane Yeend claims.
The “bitter sweet” deal comes after the company has fought over finance for years, with Imagine’s exposure to the United States resulting in a significant blow to revenue after the onset of the global financial crisis.
Yeend, who founded Imagine Entertainment in the mid-1980s, says he is sad to see the two titles – “Fact or Crap” and “Battle of the Sexes” – gone, but it was virtually his only option.
“It is a bitter sweet deal. We ended up with a substantial sum of money in the bank but it was really our only option to get out of an ugly bank situation where we had our facilities reduced to the point the company was grinding to a halt.”
“It’s hard to manage a global supply chain to 85,000 retail stores when your bank pulls its support,” he says.
Battle of the Sexes was at one point one of the most popular board game titles in the United States.
Imagine, which ranked sixth in the 2007 SmartCompany Smart50 awards and counts entrepreneurs John Singleton, Brett Blundy and Jack Cowin as investors, has had to scale back growth plans due to the poor retail environment in the United States.
Over 80% of the company’s $57 million in revenue came from the US in the 2006-07 year, with many of its products in major retailers including Target and Wal-Mart. There were plans for $80 million in turnover during 2007-08, but the financial crisis meant that target was scaled back.
Yeend says it’s been more difficult than ever to get help from the banks and says he is being taken advantage of so Westpac can make a profit.
“Like many other SME’s [we] were being raped and pillaged so Westpac can make record profits. Two years of my life living on no sleep trying to stay alive while our government backed banks who advertise the fact that they are behind entrepreneurs and exporters… what a load of shit.”
“Sad to see the titles go but que sera sera. We are a global team of smart people and with a great businesses and brands and now we can get back to work.”
Westpac has been contacted for comment.
The company started in 1983, and by the late 1990s had signed deals with large entertainment groups including Disney to market its new type of board game that allowed interactivity with DVD software.
But just as the company was hitting its stride in 2007, the financial crisis hit and a plan to sell the company even fell through as private equity dried up.
He also highlighted bank troubles in late 2009, saying that a $40 million line of credit was reduced to just $12 million “overnight”.
“Basically we set a strategy for 2008 and then it was really go out and sell the strategy and come August we smacked into the worst retail conditions imaginable. The supply chain just stopped,” he told SmartCompany last year.
At the time, the value of the Australian dollar continued to fall and Yeend faced some difficult choices, resulting in the move to scrap the company’s R&D unit.
As a consequence, the company lost about 140 employees. Imagine also sold off a number of subsidiaries and had to start targetting cashed up clients, “because then all my customers started going broke… all the big retailers around the world”.
“We dodged a fair few of the bullets but we copped a couple,” he said.
Patrick Stafford is a freelance journalist and a former deputy editor of SmartCompany.
