Wednesday, November 14, 2007

Atari CEO Resigns as Company Withdraws from Production

Amidst concerns about the company's lack of funds and ability to continue its business, Atari officials announced today that the publisher will "re-focus its operations on publishing and distribution in North America, completing its withdrawal from the production business."

According to the release, Atari's operations going forward "will involve title acquisition, sales and marketing, and physical distribution of products from [Infogrames] IESA, its 51% shareholder, and other selected partners."

Atari has agreed in principle to terminate its Production Services Agreement with IESA in the near future. The company is planning to transfer certain employees and contract other staff on a project basis for a limited period of time. Unfortunately for Atari's employees, this restructuring initiative will also reduce the company's current workforce "in order to re-align the Company's cost structure with its on-going business base."

Along with the withdrawal from production, Atari CEO David Pierce has also announced his resignation. Curtis G. Solsvig III, Chief Restructuring Officer, has been appointed interim CEO and will assume Pierce's responsibilities for now. Atari said that an executive search for a new CEO has already been started.

"We appreciate David's support and commitment through a difficult period in the Company's history and wish him well in his future endeavors." said Gene Davis, Chairman of the Board of Directors.

Finally, as part of the new plan Atari has also licensed its Test Drive franchise to Infogrames under a six-year agreement that provides for a $5 million advance royalty. According to the terms, Eden Studios, which originally developed Test Drive Unlimited for Atari, has the rights to develop and market at least two new releases of the franchise during the life of the license. The deal was signed on Nov. 8, 2007, and Atari said it "will assure the continued vitality of the franchise and will strengthen the relationship between Atari and its parent company while providing an important element in the on-going financial restructuring of Atari."

"Atari continues to take important steps to stream-line operations and establish a winning business plan. We expect that the actions we are undertaking today will position us for the future as a preferred business and distribution partner," concluded Curtis G. Solsvig III.

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