THQ Enters Forebearance Agreement With Creditors
Posted by Andy Green
Foreclosure delayed, for now
THQ has been going through some difficult times lately. The developer currently has $16.4 million outstanding on its facility and two weeks ago it defaulted on a loan worth $50 million. Things were looking bleak, but it appears the company has entered into an agreement with the finance company Wells Fargo Capital Finance that will delay what seemed an inevitable foreclosure.
This forbearance agreement prevents legal action from being taken against THQ for failing to meet its credit deadlines — something that is crucial to the company's survival. The period of the forbearance extends to January 15th 2013, and Wells Fargo has agreed to make additional loans to the company throughout the period of the agreement.
Brian Farrell, THQ’s Chairman and Chief Executive Officer, released the following statement:
We are pleased to have reached an agreement with Wells Fargo. This agreement enables us to continue focusing on bringing our games in development to market. Meanwhile, we are evaluating financial alternatives that will transition the company into its next phase.
THQ did reveal that it had "entered into exclusive negotiations with a financial sponsor regarding financing alternatives which may result in, among other things, significant and material dilution to shareholders", so perhaps there is some hope the ailing developer can claw itself out of this hole.
Also announced was the resignation of Paul Pucino, Executive Vice President and Chief Financial Officer. No replacement was named as the company begins to evaluate its alternatives, although it was confirmed it has retained FTI Consulting to assist its finance and accounting team.
THQ has just one game on Wii U with launch title Darksiders II. The company has games lined up for other consoles, most notably Metro: Last Light and South Park: The Stick of Truth, both of which have recently been delayed.
What do you think of this news? Are you hoping Darksiders II won't be the last THQ game we see on Wii U? Let us know your thoughts in the comments below.