Atari 2009 Annual Report Download - page 21

ANNUAL FINANCIAL REPORT – REGISTRATION DOCUMENT
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revenue targets reached (there is no settlement option). The earn-out is partly payable in October 2010 (in cash
only) and partly in March 2011 (in cash and newly-issued Atari shares);
 A bonus representing a maximum amount of USD 20 million (approximately €15.7 million), if online revenue
generated by the Champions Online and Star Trek Online video games exceeds the targets set by Cryptic. Half
of the bonus is payable by the end of November 2010 and the balance by mid-May 2011. It will be paid in cash
or in newly-issued Atari shares, or in cash and newly-issued Atari shares at Atari‟s option. In the event of a
share-based payment the number of shares will be contingent on Atari‟s share price at the payment date.
The Stock Purchase and Transfer Agreement includes the customary warranties as well as specific non-commitment
warranties for (i) the three shareholders selling their Cryptic shares and (ii) the Chief Executive Officer of Cryptic, who all
hold stock options.
In addition, the Stock Purchase and Transfer Agreement provides for early payment of the earn-out and the bonus in the
event of one of the following:
 The change in control of Cryptic;
 The change in control of the Company, if such change affects the ability of the Company or the absorbing entity
(in the case of a merger) to meet the Company's commitments in relation to the Stock Purchase and Transfer
Agreement;
 The Company not meeting a certain number of its commitments provided for in the Stock Purchase and
Transfer Agreement; in particular, that of financing Cryptic's working capital up to USD 17.5 million (this amount
may be adjusted under certain conditions) until the release of Champions Online and Star Trek Online as well
as a commitment with regard to the sales terms and conditions of games on the market and a commitment to
maintain Cryptic's key assets and employees needed for games development.
The Stock Purchase and Transfer Agreement provides that a delisting of the Company's shares before payment of the
earn-out which is not due to a change in the control of the Company in favor of a financial investor would result, at the
option of the beneficiaries of the earn-out and the bonus, in an all cash payment of the earn-out and the bonus.
Based on the Company‟s most recent estimates at March 31, 2009, the initial cash payment and the entire earn-out
(representing €35.1 million) was recognized in the Group‟s accounts, before taking into account transaction costs.
In order to finance the purchase of Cryptic and meet Cryptic‟s working capital requirements, on December 3, 2008 Atari‟s
Board of Directors authorized a €30 million shareholder loan granted to Atari by BlueBay bearing annual interest of 15%.
This loan was repaid by set-off by the Company on January 13 and January 23, 2009, and fees totaling 3% of the
amount of the loan (i.e. €900,000) were paid to BlueBay.
For further information see Note 23 to the 2008-2009 consolidated financial statements.
Amendment to the credit facility agreement entered into with Banc of America
Atari and its main European subsidiaries entered into a credit facility agreement with Banc of America on April 21, 2006
aimed at refinancing all of the Group‟s the short- and medium-term debt. Eight amendments have been made to this
agreement. In the fourth quarter of 2008-2009 the seventh and eighth amendments were signed on February 27, 2009
and March 31, 2009 respectively, for the purposes of (i) extending the facility‟s expiration date to December 31, 2009 and
(ii) increasing the total amount of the facility from €46.8 million to €61.8 million.
As far as the Company is aware an agreement has been signed between Banc of America and BlueBay under which
BlueBay has an interest in the credit facility. At March 31, 2009 the credit facility had been drawn down in an amount of
€47 million and there was no letter of credit to be recovered. Negotiations with Banc of America are currently in progress
to extend the expiration date of this credit facility until July 2010.
With regard to the financial ratios, on March 31, 2008 Banc of America waived its rights in the event of non-compliance
with the financial ratios and new financial ratios were set to be negotiated for subsequent quarters. As of March 31, 2009
and the filing date of this document, these negotiations were not yet completed. Consequently the Group does not have
financial ratios to meet in relation to the Banc of America credit facility. For further information see Note 13 to the 2008-
2009 consolidated financial statements.
Issue of bonds redeemable for new or existing shares with stock warrants attached (ORANE -BSA)
for €40.5 million
In January 2009 Atari issued €40.5 million worth of bonds redeemable for new or existing shares with stock warrants
attached (ORANE-BSA).
This issue enabled the Company to finance:
 The acquisition of Cryptic Studios Inc. in the amount of USD 27.6 million (approximately €21.7 million) before taking
into account any earn-out or bonus payment, through the repayment of a €30 million bridging loan granted by
BlueBay on December 3, 2008 for the purpose of financing (i) the initial purchase price for Cryptic Studios Inc.
(including transaction fees and commissions) and (ii) Cryptic Studio Inc.‟s future working capital requirement;
 The repayment by the Company of a USD 14.0 million loan (approximately €11 million) granted by BlueBay to Atari
Inc.