THQ Filing for Bankruptcy

[RyRy]

http://uk.reuters.com/article/2012/1...8BI1CJ20121219

Videogame maker THQ Inc said on Wednesday it filed for bankruptcy protection, and entered into an agreement with private investment firm Clearlake Capital Group for a potential sale of its assets, in a bid to tackle its financial troubles.

The assets to be sold include THQ's four studios and games in development. The filing was made in U.S. bankruptcy court in Delaware.

Shares of THQ, which were briefly halted before the announcement, plunged 74 percent to close at 36 cents on the Nasdaq on Wednesday.

"They're currently in default of one of their credit lines, so it's not a huge surprise," said Mike Hickey, analyst at National Alliance Capital Markets.

Product delays and poor-performing products in a videogame market that is struggling to reverse flagging sales "kind of circled in aggregate to lead to their demise," Hickey said.

The Agoura Hills, California-based company said Clearlake was a "stalking horse bidder" or a potential buyer chosen from a pool of bidders to make the first bid.

This "allows other interested parties to come forward with competing bids," THQ said in a statement.

Foreign operations, including Canada, are not part of the bankruptcy filing, the company said.

Hickey said larger game publishers like Electronic Arts Inc or Ubisoft Entertainment SA might take a look at some of THQ's studios or intellectual property.

Known for its wrestling and "Saints Row" games, THQ has been losing ground to Activision Blizzard Inc and other larger rivals. Stockholders approved a 1-for-10 reverse share split of common stock in late June to raise the share price and avoid delisting.

THQ also said it has commitments from Wells Fargo & Co and Clearlake for financing of approximately $37.5 million, subject to approval from court.

THQ, which has cut staff and shut noncore businesses in an effort to revive its business, has studios in Austin, Texas, and Champaign, Illinois, as well as Canadian studios in Vancouver and Montreal.
Its studios and development teams will continue to operate during the sale process, the company said.

In a U.S. Securities and Exchange Commission filing last month, THQ said Wells Fargo warned the company on October 16 that it had borrowed beyond the limits of its loan terms.

THQ then made a $5.6 million payment on the $21 million that it had borrowed in the quarter ending September 30 in an attempt to regain compliance under its loan agreement. Wells Fargo then informed the company that it was in default under the terms of its credit facility, according to the filing.

The company announced late last month that Wells Fargo Capital Finance LLC had agreed to forgo action against the games publisher on any default on its $50 million credit facility until January 15, 2013.

Executives announced on a November 5 earnings call that they were postponing the release of several titles including its "South Park" game, increasing the company's need for capital.


The company also has $100 million in convertible notes that are due in August 2014.

THQ's market cap dropped about 72 percent to $2.7 million on Wednesday.

(Editing by Gerald E. McCormick, Tim Dobbyn and Matthew Lewis)

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[David]

oh i thought they were doing all right, unfortunate.
waiting for them to fix bugs in wwe 13 though :@

[RyRy]

I'm concerned that Activision will buy Dawn of War and we'll have a hybrid called Call of Dawn of Duty War.

IT JUST SOUNDS SO WRONG.

[dbgtz]

I thought Saints Row would have got them out of the dog house ngl.

[Luke367]

oh i thought they were doing all right, unfortunate.
waiting for them to fix bugs in wwe 13 though :@

WWE 13 worse game ever they didn't really updated it from WWE 12 I wanted to play Ryback & AJ the first day it came out & you don't have them? They just tell you to download public ones? Tbf thats not good another in my eyes. They make the game they should add all the players! It will be for the best if they go. THQ is the worse at making games. Let EA Sports buy them atleast they get the updates done if any errors come.

[Chris]

Ahh bad news. I'm a fan of both the Dawn of War series and Saints Row which were both big sellers. I know saints row 4 is in the works so hopefully that can be continued elsewhere.

[Chippiewill]

I hope rockstar bails them out so we can have them focus on srs GTA and have them be fun and wacky with SR.

THQ have been in financial bad books for a while now, this was sadly inevitable.

[Mikey]

I loved Saints Row and also other games that they made, I remember playing games on my PS2 and seeing THQ pop-up.

Gutted for them, hopefully Saints Row can be made by another company or another company can merge with them somehow.

[GoldenMerc]

Hope they stay afloat, they've been around since I was little, still do WWE games etc afaik

[Lamz]

WWE has gone downhill for a long time now so that may be one of the reasons, also SR3 didn't sell out as far as I know... so yeah... unlucky