The company is now seeking a rights issue worth $6.8 million to repay its debts.
Fragbite CEO Marcus Teilman has resigned to "pursue new challenges" one day after the publisher declared Alara Prime developer Fall Damage bankrupt.
The Swedish video game and esports company has named chairman Stefan Tengvall as interim CEO. Tengvall will step down as chairman of the board as a result but will remain a board member. Board member Sten Wranne will replace him as chairman.
"The board and I thank Marcus for his efforts and his commitment to Fragbite Group during his time as CEO and wish him the best of luck in the future. The company has initiated a cost reduction programme with the aim of securing a healthy cash flow in both the short and long term," said Tengvall in a press release.
"Further examining the costs of the group and our portfolio companies as well as identifying opportunities for restructuring, thereby enabling increased capital for our profitable underlying core holdings, will be my main focus in the coming period. I look forward to the task as it is something I have done previously in my career. We have a fantastic group that can become even better."
Fragbite acquired Fall Damage in October 2023 for $1.8 million but has declared the studio—formed by DICE alums in 2017—bankrupt after just eight months. The company said Fall Damage and its free-to-play shooter Alara Prime had become "unsustainable."
After a turbulent 24 hours, Fragbite is now pursuing a rights issue worth approximately SEK 72.1 million ($6.8 million) and has arranged bridge financing of SEK 20 million ($1.9 million) to address its "short-term liquidity needs."
"The proceeds from the upcoming rights Issue are intended to finance the repayment of the company's utilized credit facilities and strengthen the balance sheet to leverage the opportunities surrounding the company's remaining portfolio," it explained.
Fragbite is adamant it boasts a "fundamentally stable, profitable core business with a very strong pipeline of planned game releases and projects in 2024 and 2025." That business includes web3 and esports activities, which the company claims leave it uniquely positioned to "leverage market trends and changes in consumer behavior among young players."
Fragbite also feels recent investments in its publishing subsidiary, Playdigious, will allow it to double the number of mobile titles it operates across 2024 while signing larger projects.
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