Game has been granted breathing space by its banks after they agreed to revise the terms of the game specialist’s banking facilities.

The struggling video games retailer has said it will meet its covenant tests for the year to January 31 when they are tested on February 27, after warning last month that it may not meet them.

The move comes after revealed on Wednesday that Game was aiming to sell its overseas business to stem losses. It has 670 stores outside the UK.

The company now expects loss before tax and non recurring items for the year to the end of last month will be around £18m. The revised support of its lenders means it should now meet its covenant test.

Game said in a statement: “Under the terms of the revised facilities, the group has agreed to operate within lower limits of its existing facilities than was previously available. These revised facilities will allow the company to continue to trade.”

The company has also agreed to provide an updated strategic plan for review, and approval in part, by its lending syndicate, led by Royal Bank of Scotland.

Last month Game revealed its like-for-like sales in the UK and Ireland slumped 15.2% in the eight weeks to January 7.