3DO files for bankruptcy, looking to sell assets
By Ben Berkowitz
LOS ANGELES, May 28 (Reuters) - Video game publisher 3DO Co. <THDO.O> on Wednesday said it had filed for Chapter 11 bankruptcy protection and would seek to sell either the company or its assets.
Redwood City, California-based 3DO, which has struggled to gain a foothold in the competitive games business and has relied on Chief Executive Trip Hawkins for recent funding, said it filed for bankruptcy protection in federal court in northern California.
In a statement, Hawkins said 3DO was pursuing either a sale of the company or its assets and expected to continue to operate as it worked through the Chapter 11 bankruptcy process.
"This filing gives us more time to complete transactions in the interest of our stakeholders," Hawkins said in a statement. "While we hope that this news will generate additional new opportunities, at this point we are focused on pursuing either the sale of the entire company or the sale of its assets."
The company had said two weeks ago it was exploring its options, including a merger or selling publishing rights to its games in progress, after a sales drop in the March quarter left it unable to fully tap its credit facility.
On May 8, in documents filed with securities regulators, 3DO said it had warned its staff of mass layoffs that were expected to be conducted in July.
In a research note in February assessing the state of the industry and the financial prospects of the publicly traded game companies, Banc of America Securities analyst Gary Cooper said 3DO had no value as an acquisition target.
The company, which has been criticized in the gaming press for its multiple "Army Men" games, has drawn attention for the game "Four Horsemen of the Apocalypse," a violent adventure title. It has also been praised for its "High Heat" baseball game franchise.
Shares in 3DO closed up 9 cents at $1.33 on the Nasdaq before the bankruptcy filing was announced. The company avoided being delisted from the Nasdaq last year by conducting a one-for-eight reverse split of its stock.
Hawkins, who founded 3DO in the early 1990s, became an industry legend for starting Electronic Arts Inc. <ERTS.O>, now the world's largest independent games publisher, in the 1980s.
In December, Hawkins himself agreed to provide the company a bridge loan of up to $10 million.
The executive, educated at Harvard and with a work background at Apple Computer Inc. <AAPL.O>, is well-known in the industry for his passion and high-profile projects.
In the book "Game Over," author David Sheff recounts the tale of a 1989 meeting at EA during which, under pressure from financial advisers, Hawkins removed his shoe and began pounding it on the table, in the style of former Soviet leader Nikita Khrushchev.
However, 3DO was started not as a games company, but rather as a game-console designer. It created the specifications and underlying technologies and then licensed them to companies like Panasonic and Goldstar to be turned into multimedia entertainment devices.
The consoles were hurt by high prices and a limited lineup of titles compared to rival platforms at the time. 3DO eventually exited the console business and turned strictly to game software.
05/28/03 22:08 ET
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