French Firm Taking Control of Interplay

Interplay Entertainment Corp., the financially troubled maker of video games such as Earthworm Jim, Baldur’s Gate and the soon-to-be-released Messiah, said Wednesday that French software developer Titus Interactive S.A. plans to invest an additional $25 million in the Irvine company.

The transaction, if completed, would give Titus a controlling interest in Interplay, effectively ending the company’s struggle to remain an independent enterprise.

Titus, which already owns 12% of Interplay, tentatively agreed to pay $4 a share for another 6.25 million shares, nearly double Interplay’s closing stock price of $2.06 on Wednesday. In addition, Brian Fargo, Interplay’s founder and chief executive, is selling 2 million Interplay shares for an undisclosed number of Titus shares.

The deal was announced after the stock markets closed. In France, Titus shares gained $6.99, or 6.5%, to $114.26.

Titus Chairman Herve Caen will become president of Interplay, replacing Christopher J. Kilpatrick, who left Interplay last month for undisclosed reasons. Fargo will remain as chairman and chief executive.

Interplay officials declined to say whether there would be any layoffs as a result of the deal. The company has about 410 employees, the bulk of them in Irvine.

“This deal provides us with significant access to capital and gives us access to several great video game licenses, including Zena, Hercules and Superman,” to which Titus holds the video game rights, said Kirk Green, spokesman for Interplay.

Officials at Titus, which is based in Montfermeil, couldn’t be reached for comment.

Titus develops video games for the Sony Playstation and Super Nintendo systems and, like Interplay, is unprofitable. Titus lost about $3 million on sales of about $8.5 million in 1998.

Interplay has struggled since going public last June at $5.50 a share. While its sales have more than doubled over the past two years, to $126 million in 1998, its losses have nearly doubled, to a $28.2-million deficit last year.

Along the way, the company has experienced serious cash-flow problems, caused in part by missing key release dates for some of its games last holiday season.

Hoping to head off more problems, Interplay cut its staff by 20%, sliced upper-management salaries and restructured its corporate executive staff.