Shares of GameStop (NYSE:GME) surged 18% on Wednesday, as traders applauded its plan to rid itself of debt.
GameStop mentioned late on Tuesday it could repay senior notes with a principal quantity of $216.4 million on April 30. The notes weren’t scheduled to come back due till 2023.
The online game retailer will use money readily available to redeem the notes, which comprise its remaining long-term debt; GameStop ended fiscal 2020 with greater than $500 million in money reserves. The corporate additionally filed a prospectus complement with the U.S. Securities and Change Fee (SEC) earlier this month, which is able to permit it to promote as much as 3.5 million of its shares at market costs to boost extra funds.
GameStop is within the midst of a serious and much-needed turnaround technique. Chewy founder and former CEO Ryan Cohen took a roughly 13% stake within the struggling retailer final 12 months. GameStop mentioned final Thursday that Cohen will turn into its chairman after its upcoming annual shareholder assembly in June. Cohen has pushed to revamp GameStop’s administration staff with executives from corporations like Amazon with expertise in e-commerce and digital expertise.
GameStop will want their experience. Digital sport downloads stay a worrisome menace to its brick-and-mortar retail shops. GameStop should discover a solution to efficiently shift to a primarily e-commerce-based mannequin if it is to outlive and thrive over the long run. However GameStop’s strikes to cut back its debt and strengthen its steadiness sheet ought to take any near-term danger of chapter off the desk — a notable accomplishment that traders seem like celebrating in the present day.
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