Retail

GameStop Transformation Continues and Long-Term Debt Disappears

GameStop Corp. (NYSE: GME) stock made a handy gain early on Monday after the company announced that it had cleared out all of its long-term debt. This is a bold move for the video game retailer, as it strengthens the balance sheet and allows for a little more flexibility.

Specifically, the firm announced that it had completed its voluntary early redemption of $216.4 million in the principal amount of its 10.0% senior notes due in 2023. Note that this voluntary early redemption covered the entire amount of the outstanding 10% senior notes, which represented all of GameStop’s long-term debt.

The move on the balance sheet comes after GameStop appointed a handful of new executives to right the ship in what was a failing company. 24/7 Wall St. recently reported on this:

GameStop … takes the next step in its transformation as a company with a plan to nominate a new slate of individuals for its board of directors, including a new board chair who has been a vocal activist investor.

The GameStop transformation has been happening for a while now, and a new board chair seems to be the icing on the cake. Recently, the video game retailer capitalized on its massive gains with a secondary offering and even snagged a couple of top executives from Amazon.

In terms of this most recent development, GameStop nominated six individuals to stand for election to its board of directors at the annual stockholder meeting on June 9. The proposed directors include Alan Attal, Larry Cheng, Ryan Cohen, Jim Grube, George Sherman and Yang Xu. As it stands now, Cohen is set to take over the role as chairperson, and he has been one of the more vocal activist investors.

Excluding Monday’s move, GameStop stock had outperformed the broad markets with a gain of 821% year to date. In the past 52 weeks, the share price was up closer to 2,929%.

GameStop stock closed Friday at $173.59, in a 52-week range of $3.77 to $483.00. The consensus price target is $41.79. Following the announcement, the stock was up about 2% at $176.98 in premarket trading Monday.