Scout Gaming set to axe 50% of staff in drastic cost-cutting measure
A SEK17m financial black hole triggers radical action including securing a SEK20m bridge loan from investors
Scout Gaming Group (SGG) has announced it is to cull more than half of its workforce after identifying “previously unknown financial commitments” pertaining to the financial year 2021.
In three separate press releases issued on the morning of 30 June, the company announced a financial commitment of SEK17m (£1.4m), the laying off of over half its staff and plans to carry out a fully secured rights issue of SEK100m.
The financial commitment has ultimately had a detrimental effect on the profit for the quarter, amounting to a SEK5.5m loss.
Three of the company’s major shareholders and Niklas Braathen, chairman of the board, have guaranteed SEK20m to secure the company’s working capital.
A frustrated Niklas Jönsson, acting CEO of SGG, said: “It has been very strenuous to find another historical deficiency in the company’s accounting and internal control, which is totally unacceptable.
“We have taken decisive action during the last months to ensure the quality within the company’s administration. We feel confident that the identified deficiencies are the last in the internal due diligence process that has been conducted.”
To mitigate the losses, the company’s board has made the “big decision” to reduce its workforce from 131 to 63, with a new management group also being formed.
The drastic reduction in headcount is across all divisions and offices in both Bergen, Norway, and the city of Lviv in Western Ukraine – the latter of which was described by Braathen as a “particularly difficult decision”.
He added: “It is with great sadness that this happens but is unfortunately necessary to ensure the company’s continued existence.”
Finally, SGG confirmed that it is to carry out a fully secured rights issue of SEK100m during the summer.
The financing plus the bridge financing will provide the company with the cash to continue running “at least until the rights issue has been completed”.
At the time of writing. the Stockholm-listed company’s share price had plummeted 35% from SEK1.7 to SEK1.1.