THQ Files For Bankruptcy Protection

[Gryphon]

The Agoura Hills, California company is working with private investment firm Clearlake Capital Group, which has agreed to enter a $60-million "stalking horse" bid for THQ's U.S. assets. Any potential suitor for THQ would have to offer more than that.

Details of the move were made available in the following press release.

THQ Inc. Secures Asset Purchase Agreement with Affiliates of Clearlake Capital Group, L.P.

Clearlake Offers to Acquire THQ’s Assets Via Section 363 under Chapter 11; Company Obtains Commitment for Interim Financing to Fund Operations Without Interruption

AGOURA HILLS, Calif.--(BUSINESS WIRE)--Dec. 19, 2012-- THQ Inc. (NASDAQ: THQI), a leading worldwide developer and publisher of interactive entertainment software, today announced that it entered into an Asset Purchase Agreement with a “stalking horse bidder,” affiliates of Clearlake Capital Group, L.P., to acquire substantially all of the assets of THQ’s operating business, including THQ’s four owned studios and games in development. The sale will allow THQ to shed certain legacy obligations and emerge with the strong financial backing of a new owner with substantial experience in software and technology.

To facilitate the sale, THQ and its domestic business units have filed voluntary petitions under Chapter 11 of the U.S. Bankruptcy Court for the District of Delaware. The company’s foreign operations, including Canada, are not included in the filings. The company has obtained commitments from Wells Fargo and Clearlake for debtor-in possession (DIP) financing of approximately $37.5 million, subject to Court approval.

THQ will continue operating its business without interruption during the sale period, subject to Court approval of THQ’s first-day motions. All of the company’s studios remain open, and all development teams continue. The company remains confident in its existing pipeline of games. THQ maintains relationships with some of the top independent development studios around the globe. As part of the sale, the company is seeking approval to assume the contracts of these studios, and Clearlake will assume these contracts.

“The sale and filing are necessary next steps to complete THQ’s transformation and position the company for the future, as we remain confident in our existing pipeline of games, the strength of our studios and THQ’s deep bench of talent,” said Brian Farrell, Chairman and CEO of THQ. “We are grateful to our outstanding team of employees, partners and suppliers who have worked with us through this transition. We are pleased to have attracted a strong financial partner for our business, and we hope to complete the sale swiftly to make the process as seamless as possible.”

According to Jason Rubin, who joined THQ as President last May, “We have incredible, creative talent here at THQ. We look forward to partnering with experienced investors for a new start as we will continue to use our intellectual property assets to develop high-quality core games, create new franchise titles, and drive demand through both traditional and digital channels.”

Clearlake has agreed to serve as the “stalking horse bidder” for a Section 363 sale process, which allows other interested parties to come forward with competing bids. Aggregate consideration offered by Clearlake for the purchase totals approximately $60 million, including a new $10 million note for the benefit of the company's creditors. The company is asking the Court for a schedule to complete the sale process in about 30 days.

Consumers and retailers should see no changes while the company completes a sale. The new financing will support business operations throughout the period. THQ does not intend to reduce its workforce as a result of the filing, and employees will continue to work their usual schedules and receive normal compensation and benefits, pending customary Court approval.

As is the case after a Chapter 11 filing, THQ expects to receive notice from NASDAQ informing the company that its shares will be delisted from the exchange within nine calendar days of notification.

THQ is being advised by Centerview Partners LLC and FTI Consulting as its financial advisors and Gibson, Dunn & Crutcher as legal counsel. Clearlake is being advised by DLA Piper as legal counsel.

For additional information about THQ, please visit www.thq.com. For information regarding the Chapter 11 case, please visit www.kccllc.net/thq.




Hmm, I don't play THQ games besides the WWE agmes but it always sucks when a game company goes bankrupt.

[TsaiMeLemoni]

That's kind of sad, but it seems like recently they just haven't been putting out games that have been very successful (outside of the Saint's Row franchise).

[Alex]

Lotta videogame companies have hit hard times.
...hard times, and they make the WWE games so im doing it

[Addams]

Sad, their warhammer games are fun.

Tough times indeed for many industries.

[TsaiMeLemoni]

If more companies bite it, I wonder how much stagnation we'll see in games, and for how long. The remaining companies won't really be able to afford to be creative if those creative games don't pay the bills.

[sHayden]

If more companies bite it, I wonder how much stagnation we'll see in games, and for how long. The remaining companies won't really be able to afford to be creative if those creative games don't pay the bills.

You will get one copy of Madden and one copy of CoD per year, that is all!
Truly a frightening prospect but thankfully things will probably never get that bad. Kickstarter has proven there is a market out there for different/innovative games.

[andthegunslinger]

I think there will always be good, creative guys out there who manage to get funding. Yeah it sucks we get the same COD and sports games every year but it's like.. movies. Some suck, some are incredible.

Every year there are at least 5 great games/movies out and I don't see that stopping. I personally only buy around 10 games a year with perhaps 3-4 indies (often the big games of the previous year at a discount) and that suits me just fine as I can pretty much always find 10 great games every year. With games I think you get a bit of a sixth sense regarding quality. Sure, there are some sleeper hits and some disappointments but give or take 1-star you can pretty much judge how good a game is going to be and whether it is worth a purchase.

[Alex]

We were discussing on the wrestling board how THQ owes WWE 45 million for the last game still.

[andthegunslinger]

Wow really? I bet Vince is PISSED.

[Alex]

Wow really? I bet Vince is PISSED.

That's the rumor.

[Shikidum]

If only EA would go bankrupt....

[andthegunslinger]

I never get the EA hate. Sure they're THE corporation and they make some trash but they've published good games and have made some classics over the years.

But a video game library without EA is surely a worse place?

Without EA there's no Mass Effect, Dragon Age, Dead Space, FIFA, System Shock Battlefield or Command & Conquer.

[Tish-the-Scorpion]

video game industry can go either way, but i suspect safe FPS's (and shooters in general) to be the standard for a loooooong time. the industry seems to have forgotten there are other genres out there. sure there'll always be funding for risk taking games, but that's not the norm. especially with studios crashing and burning. and the Japanese companies are worse but for different reasons. i expect that eventually the industry will concentrate in top quality moderate budget games, instead of big budget triple a titles that'll make or break the studio.

[Alex]

I never get the EA hate. Sure they're THE corporation and they make some trash but they've published good games and have made some classics over the years.

But a video game library without EA is surely a worse place?

Without EA there's no Mass Effect, Dragon Age, Dead Space, FIFA, System Shock Battlefield or Command & Conquer.

People hate success.

[Hiromi]

I never get the EA hate. Sure they're THE corporation and they make some trash but they've published good games and have made some classics over the years.

But a video game library without EA is surely a worse place?

Without EA there's no Mass Effect, Dragon Age, Dead Space, FIFA, System Shock Battlefield or Command & Conquer.

Mass Effect and Dragonage franchises were in development well before EA acquired Bioware. Ditto Command and Conquer, which was an old franchise by the time EA bought Westwood.