Britain's SCi said it needed to raise £50 million after the cost of scrapping a series of ill-conceived computer games caused a heavy first-half loss, hammering its shares to a five-year-low.
The company behind Lara Croft, heroine of the Tomb Raider games, said it wanted to go to the stock market for cash after a first-half loss of over £80 million, compared with 18 million in the same period last year.
It also plans to cut around 270 jobs or about 25 per cent of the workforce.
SCi Entertainment Group Plc chief executive Phil Rogers said the loss was due to a one-off writedown of just under £80 million, taken due to the cancellation of 14 games development projects.
"It's clear things have to change. We recognise the failure to maximise the franchise opportunities we have had," he told Reuters.
He said he wanted to focus on the group's core products such as the Tomb Raider franchise and soccer game Championship Manager. "We do not think the cancelled games will make the revenues that we want," he said.
The shares were off 16.6 per cent at 44 pence by 0851 GMT on Friday, valuing the firm at £38 million, having earlier hit a low of 34p - their lowest since early 2003.
They were trading at over 500 pence in July.
Simon Davies, an analyst at ABN AMRO, said the need for cash was of the greatest concern to the market.
"Breathing space is getting particularly limited. The preference is for an equity issue, but with no evidence of support for this plan, in these markets it is a concern," he told Reuters.
Phil Rogers, who has been at the company almost a year, launched a business review after he replaced Jane Cavanagh as CEO in mid-January.
SCi was in takeover talks with various parties between September and January but the company said it was not currently looking for a buyer.
"At this time the board is not encouraging offers for the company but, in a consolidating industry, a sensible offer ... will be considered," it said in a statement.
Hope for a deal was raised earlier in the week as Electronic Arts made a $1.9 billion bid for Take-Two Interactive, although the approach was rejected.