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Asmodee's Parent Company Embracer Group Will Split into Three Companies

Asmodee took on a lot of debt, and its parent Embracer Group took on a lot of debt as well when interest rates were low. Now interest rates are higher than they bargained for and Embracer is doing damage control with debt shuffling games.

"On a pro forma basis as per LTM December 2023, Asmodee will have a Net Debt to Adjusted EBITDA of approximately 3.9x."

I don't understand what this means, but based on reactions on the BGG thread, it seems Asmodee is designated fall guy.

Less that Asmodee is the fall guy and more that they are most likely to carry that debt.

Not that I think that will happen, but the logic is sound-ish.

From what I understand, Embracer Group is splitting into 3 companies, and basically saddling Asmodee with all of the debt. They apparently took out something like 900,000,000 euros in loans using Asmodee assets as collateral, used the money to pay off its own debts, then split the company leaving Asmodee carrying all of it.

For context, Embracer Group spent years spending ungodly sums of money buying up companies to fatten the pot for a big sell off to I think it was Saudi Arabian investors. The deal fell through last year and Embracer's entire fiscal plan was 'sell company for all the money' without any other plan on how to pay off the massive debt they accrued in the process. This led to mass layoffs as they basically gutted most of the companies they bought, a few bought their freedom (I think there was a thread here about Miniature Market getting out of dodge), some were sold off for pennies on the dollar, and looks like the remainder are being split up now with Asmodee being responsible for all the debt.

Very likely after all the misery this causes, the executives who knifed the company in the gut will get a nice golden parachute to land safely with and move on to slash and burn another company.

Not surprised that this sort of thing happened way back when Asmodee was gobbling up smaller companies. When Asmodee did start taking over small companies, the result was that *many* titles were dropped, keeping only the "best sellers" from each company, and laying off employees.

Mostly hits the Eurogamers, as Dakka plays GW and non-boardgames. The exception is the CMON ASOIF games, maybe Atomic Games (?) for their Marvel and Star Wars games.

If this BGG entry is correct, Asmodee hasn't produced many games in the last five years? That would mean that most hardcore hobby gamers who've been in the hobby for awhile have bought their favorite Asmodee games?
https://boardgamegeek.com/boardgamepublisher/157/asmodee/linkeditems/boardgamepublisher?pageid=1&sort=yearpublished

Not that I do it but if you invest, avoid companies that take on large amounts of debt.

paying dept back in 18 months basically means that Asmodee must triple their yearly profit to pay that off or they are gone
other possibility is that they get the money via stock sales or other investors and not from profits

but for the lenders to agree to such terms they must expect to get the money back, so either they want Asmodee without paying for them, expect them to triple the profit or want to split Asmodee further and get the money by selling the smaller studios/IP

Capitalists gonna capitalism.

So is there a handy list of games and IPs that are likely to die in the next 18 months?

I'm kind of expecting they sell off the L5R IP wholecloth

Is Fantasy Flight still shackled to Asmodee? I was so excited to see them start to put out Arkham board game expansions again. This feels like sabotage.

Love MCP and Shatterpoint. Really, really hope this doesn't kill them.

 legionaires wrote:
Is Fantasy Flight still shackled to Asmodee? I was so excited to see them start to put out Arkham board game expansions again. This feels like sabotage.

AFAIK, yes.

As for this debt shuffle, a poster who claims to be a bankruptcy lawyer has this to say ... {BGG username = Michael Bane, posts are found on page five.}

Correct, the lien is the bank's. In the event the asset is sold, the liens are typically paid out first, so unless it is junior to another lien or some sort of tax obligation, it will have to be paid out before any of the other money is distributed.

My point, which I'm sure I have horribly expressed, is that I don't believe this is a bad faith transaction due to the fact the lender has their own interest to protect, and loaning that much money to a company just so they can file bankruptcy is against their best interest or a massive miscalculation. The split of the companies would not have worked unless this financing was approved, and the lender clearly feels they will make a profit somehow. Letting their collateral be sold off and becoming less secure in their position makes no sense unless they are getting some other type of consideration.

Additionally, when the lien searches are done on the collateral, the buying party would pull out if the lien isn't satisfied, otherwise they're giving their money away for a leveraged asset that they may have no equity in despite shelling out $.

If this poster does know what he is talking about, and is correct, then the lender must feel confident that Asmodee can handle that much debt and so the lender sees a return on the loan, or they would not have made said loan.

So FFG games and the other companies that Asmodee gobbled up are not necessarily doomed by this, any more than they have had activities already curtailed by being under the Asmodee umbrella. {Mainly thinking about FFG who had the Star Wars mini games taken from them and given to Atomic Mass Games, and the FFG RPG division closed.}

There's more tangible value to seize in Asmodee than the others. The videogame companies don't have a lot of tangible assets which is why companies have been using them inflate value before cutting costs (aka people). Asmodee had to invest in things that actually have value, like being one of the few companies that can afford HIPS. The big concern is whether they'll still be able to pay the license fees to Disney.

Hopefully CMON find another distributor for the Song of Ice and Fire tabletop game. Assmodee has been terrible at distribution.

 Ancestral Hamster wrote:
{Mainly thinking about FFG who had the Star Wars mini games taken from them and given to Atomic Mass Games, and the FFG RPG division closed.}

The RPGs were similarly taken and given to Asmodee's RPG shop, Edge Studios. If you didn't know this, you could be forgiven, as Edge Studios has barely done anything other than adapt Legend of the Five Rings to D&D 5e.

 Psychopomp wrote:

 Ancestral Hamster wrote:
{Mainly thinking about FFG who had the Star Wars mini games taken from them and given to Atomic Mass Games, and the FFG RPG division closed.}

The RPGs were similarly taken and given to Asmodee's RPG shop, Edge Studios. If you didn't know this, you could be forgiven, as Edge Studios has barely done anything other than adapt Legend of the Five Rings to D&D 5e.

Basically that and Midnight, yeah. And Midnight was already in the works when they got it.

The only real "new" thing they've done has been on L5R... and boy it was a doozy.