THQ files for bankruptcy, Clearlake to bid for assets

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THQ files for bankruptcy, Clearlake to bid for assets

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.
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Source: Reuters UK

:(
 
Well, they filed for chapter 11, not 7. This means they go on about their business as usual, and will sell some assets to help them do so. This also means that none of the currently developed games are in danger, for now. Metro Last Light will see the light of the day, as will South Park RPG, Company Of Heroes 2 and others.

However, the investor confidence in THQ is pretty much zero at this point. Their share was about $1 before the news, which tanked to $0.3 after the announcement. If the upcoming line up fails then no more Metro, Warhammer, Saints Row, Company Of Heroes unless some other publisher picks them up.
 
Oh man thats sad. In case THQ does not revive as a company wont a big game publisher buy the rights for a few of their popular games? It does have a few credible franchises.
 
they should atleast try the kickstarter way for metro LL .... it is sure to generate enough money for them.
 
The IP rights can be purchased depending on who has it and if they are willing to sell it. The developers under their wing will now have to move onto newer publishers. Popular franchises will definitely be picked up by publishers. There is a high probability that WWE franchise would probably land up with EA. Last I heard Homefront 2 was being developed Crytek UK and with the first game being a mediocre affair, I doubt this would have any takers. For the rest, we would probably need to wait, till the final fate of THQ is decided.
 
That's precisely what I was hoping to not happen. Incompetent publishers get successful IP for cheap, make pathetic sequels which fail, and then the IP is lost for ever. Yes, I am looking at you EA. I will stab a kitten if you buy out Relic or Volition.
 
I am hoping some responsible publisher buys out the Warhammer IP. Hopefully 2K, but lets see. This could also mean someone decides to make Homeworld 3, and then I can die happy.
 
jc36lect3r said:
I am hoping some responsible publisher buys out the Warhammer IP. Hopefully 2K, but lets see. This could also mean someone decides to make Homeworld 3, and then I can die happy.
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Doesn't the GAMES WORKSHOP License belong to Relic OR are they getting dissolved too?

Are the developers getting dissolved OR are they being bought + IP?

What happens to CoH 2 and METRO Last Light releases?
 
There's a bit of a tangle with the Games Workshop licenses. Creative Assemble (Total War series) snagged up the Warhammer IP back in December 2012. The Escapist : News : Total War Developer Snags Warhammer

However, the Warhammer 40K IP (Space Marine, Dawn Of War etc) still belongs to Relic and should be up for grabs. As for CoH 2 and Metro, THQ is selling assets so that they can release the pending games. But after that, who knows.
 
jc36lect3r said:
There's a bit of a tangle with the Games Workshop licenses. Creative Assemble (Total War series) snagged up the Warhammer IP back in December 2012. The Escapist : News : Total War Developer Snags Warhammer

However, the Warhammer 40K IP (Space Marine, Dawn Of War etc) still belongs to Relic and should be up for grabs. As for CoH 2 and Metro, THQ is selling assets so that they can release the pending games. But after that, who knows.
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Well that is good and bad because the Creative Assembly is a good developer in my books (TOTAL WAR fan here).

As long as they can get METRO Last Light and CoH 2 without hiccups I am happy, later all dependent on the future overlords of the respective franchises.
 
This just came out in Twitter

https://twitter.com/dominictarason/status/293789521974284288

and shortly after, this

http://i.imgur.com/MZCc5M5.png

- - - Updated - - -

More news !

THQ’s assets are being auctioned off today, but the process is closed to the public and most press. At present our only source of information is unconfirmed reports from NeoGAF users, but several industry insiders have expressed their belief in these reports.
Sega Sammy is believed to be the highest bidder for Warhammer 40,000 and Company of Heroes developer Relic Entertainment. It’s a good fit; Sega is home to Total War developer The Creative Assembly, one of its most successful teams.
Reports also suggest Dead Island publisher Koch Media is leading bids for Saints Row and Red Faction developer Volition Inc.
Both companies are reasonably flush in the pocket; they may not bring in as much revenue as larger publishers, but have fewer debts and are better positioned to summon cash reserves at short notice.
Meanwhile, DDInvesting, which has closely followed the THQ bankruptcy and been the source of most public information about it, claims Ubisoft is in the running for a number of THQ’s assets.
Ubisoft boss Yves Guillemot expressed interest in THQ’s IP as early as November. THQ has a studio in Montreal, headed by Patrice Désilets, which Ubisoft lost plenty of staff too, but there’s good money riding on Ubisoft bidding for South Park: The Stick of Turth, should South Park Studios be unable to halt the auction.
Don’t get too excited until we have a verified source, obviously. No word on Darksiders developer Vigil yet.
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http://www.vg247.com/2013/01/23/sega-bids-high-for-relic-entertainment-rumour/
 
More speculations to feed the grapevine fire --

ThQ auction rumours: relic to Sega, Volition/Saints Row to Koch, South Park to UBISOFT
Sega is apparently the high bidder for developer Relic Entertainment and its games in the THQ asset auction.

The high bidder for Saints Row developer Volition is apparently Koch Media, parent company of Deep Silver (Dead Island). And the high bidder for Obsidian's South Park RPG is said to be David Dickinson, er, I mean Ubisoft.

This is not official yet. The auction is off-limits to most people. The scraps of evidence come from those apparently close enough to know what's going on.

There will be a sales hearing today at 5pm UK time where, presumably, the results of the auction will be announced.
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THQ auction rumours: Relic to Sega, Volition/Saints Row to Koch, South Park to Ubisoft • News • Eurogamer.net
 
To put everything to rest, ThQ has been dissolved, the publisher is dead. Long live ThQ.

Thankfully none of the usual suspects got the bits that we did not want them to rip out of ThQ's carcass and the spoils of the title-by-title sale are as follows --
  • SEGA has agreed to purchase Relic, developer of Company of Heroes 2 and Warhammer 40,000: Dawn of War.
  • Koch Media (owner of Dead Island publisher Deep Silver) has agreed to purchase Saints Row developer Volition as well as the publishing rights to the Metro franchise. (Update: According to a statement issued by Koch, "Deep Silver, Koch Media’s international publishing powerhouse, will lead all further development and marketing on the Saints Row and Metro franchises." The statement added that "Koch Media and Deep Silver will roll out future plans for each franchise in the coming months.")
  • Crytek, who is currently developing Homefront 2, has purchased the rights to the Homefront franchise.
  • Take-Two (parent company of 2K and Rockstar) has agreed to purchase Turtle Rock Studios’ project codenamed Evolve. (Update: While Take Two was initially rumored to have acquired Darksiders publisher Vigil, it has since been revealed that this isn't the case)
  • Ubisoft has purchased the rights to publish South Park: The Stick of Truth as well as THQ Montreal, the current developer of Assassin’s Creed creator Patrice Desilets’ project codenamed 1666. (Update: Ubisoft has confirmed the purchase, noting in a statement that "THQ Montreal will join Ubisoft’s development teams." Ubisoft also says that South Park: The Stick of Truth "is scheduled for release in calendar 2013.")
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Source: THQ Dissolved, Saints Row, Company of Heroes Devs Acquired - IGN.
 
R.I.P. THQ. :(

Darksiders franchise is dead as of now. No one bid for Vigil Games? Probably because they just have 2 games to their name. What sadness! :'(

Ubisoft will pick up the rights to the great-looking South Park: The Stick of Truth game. Showing that it is possessed of a keen sense of irony, it will also acquire the Montreal development studio headed by Desilets. Auction and bankruptcy documents have revealed the names of two games under development at the studio: Underdog and 1666.

Sega will acquire Relic, the developer of the Warhammer 40,000 strategy games. This is quite a good fit, as Sega owns Creative Assembly, developer of the Total War games in the same genre, whichrecently announced a deal to develop — wait for it — Warhammer games.

Koch Media, which publishes games under the Deep Silver label, will acquire Volition (Saint’s Row) and the Metro franchise.

Crytek, the developer of Far Cry, Crysis and, most notably, the upcoming release Homefront 2, will acquire the Homefront game license from THQ.

Finally, Take 2 will move to acquire Evolve, the new game in development from Turtle Rock Studios, the original developer of Left 4 Dead.

All other assets — including Vigil Games, the developer of Darksiders — will stay with THQ as it goes into Chapter 11 proceedings, although CEO Farrell said that the company would still attempt to find buyers if possible.
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THQ Is Dead. Here's Where Its Games Are Going | Game|Life | Wired.com
 
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