ASX-listed games developer Playside Studios (ASX:PLY) came out of a trading halt this morning to confirm it’s received firm commitments for a $25m share placement.

The update comes two days after the company announced a new work-for-hire development agreement with US-based 2K Games, which it said has a contract value of more than $10m.

In light of that deal, Playside CEO Gerry Sakkas said the extra funding will allow the company to capitalise on its position in the market with an expansion of its Australian-based operations.

Shares in PLY rose by around 6% on the news to 92c — up from around 40c in early October.


Playside domestic scale-up

PLY’s capital raise will bring in up to $28m, comprised of a $25m placement to sophisticated investors and a $3m share purchase plan for eligible investors.

The funds will be raised at 75c per share — a discount of around 18% to this morning’s trading price.

Proceeds will be deployed to “support investments in Original IP titles, new licence opportunities and to further scale the company’s work-for-hire business”, PLY said.

In addition, it’s also outlaying some money for a physical expansion to “capitalise on the availability of local talent”.

That starts with a new studio on the Gold Coast which is scheduled to be up and running by the end of the March quarter.

On the development side, Playside said its focus for original gaming content will move towards PC and next-gen consoles (such as Playstation and Xbox).

The company will also chase additional licensing opportunities through its partnerships with studios, that have so far generated licensed games under development such as The Godfather and Legally Blonde.

2K deal

Monday’s development deal with 2K Games forms part of PLY’s work-for-hire strategy — a channel that generates “fixed price development contracts which provided predictable and defined cashflows” to help fund other in-house developments, the company said.

2K Games is a subsidiary of Nasdaq-listed Take-Two Interactive Software, publisher of well-known gaming titles including the Grand Theft Auto series and the 2K Sports series.

The term of the development cycle for PLY’s 10-figure contract will be 23 months, followed by a 12-month maintenance period.

Playside said its development work on Age of Darkness – Final Stand with publishing group Team17, which had an Early Access release on the Steam platform on October 8, had been a catalyst in attracting the attention of big players such as Take-Two for ongoing work-for-hire contracts.