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Copyright 2001 www.tombraiderchronicles.com | Source The Times |

[ December 9th 2001 ]

Eidos Interactive has hired Kroll and Control Risks, the corporate detective agencies, to search for the $55m it had invested in Express.com, an American company that collapsed earlier this year. Eidos has instructed lawyers to examine if there is a basis for legal action after initial investigations failed to establish what happened to the cash.

In November 1999, Eidos, whose market value had risen to more than £1 billion from £161m earlier in the year, paid $55m (£32m) for 19.96% of Maximum Holdings, a Los Angeles company that specialised in interactive video games. Maximum had already entered into a merger agreement with DVD Express, an internet company whose main business was the sale of DVDs.

Eidosís stake in the combined entity, which was renamed Express.com, was 10.2%. Express was expected to float on Nasdaq at a value of $2 billion in 2000. This never came about. On March 7 this year Express filed for bankruptcy protection under chapter 11 after spending all its cash in just 16 months. At the time the Eidos board said it was "monitoring the situation closely."

Express is now thought to be close to heading towards chapter 7 liquidation. Eidos says it is undertaking further investigations to better understand the companyís "cash burn."

Eidos does not understand how the money could have been used so fast, given the business plan it bought into and the regular checks it undertook. It is determined to get to the bottom of the mystery with the help of forensic accountants and corporate detectives. An Eidos spokesman said at the weekend: "We continue to monitor our position with regard to Express.com. The company will not comment on courses of action, but will take whatever steps are in the best interests of shareholders."

Eidos bought into Express at the peak of the dotcom boom, when the British company was a stock-market darling. But from a worth of well over £1 billion, the companyís value has fallen to £231m.

Eidos, which became famous for the Lara Croft game character, hoped to use Express to distribute and promote its games. Express had already built an internet entertainment portal attracting 3.5m visitors a month. Eidos was only netting 380,000 on its own website.

In September this year, Eidos, which has a dual listing on Nasdaq, reported reduced first-quarter losses and made an upbeat statement about 2002. It stands to benefit from an expected upturn in the market as the next generation of consoles is launched. Sony, Nintendo and Microsoft have all brought out new systems in America and Eidos is gearing up for what it hopes will be a busy Christmas season.

Extracts and figures courtesy of The Times.

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