Loss-making videogame company THQ filed for bankruptcy Wednesday and officially became a penny stock as the shares plunged 72% to about 38¢ after trading was halted pending the news.
The company said it has inked a deal with so-called stalking horse bidder Clearlake Partners to acquire all its businesses, mostly four studios and games in development, for $60 million, including a new $10 million note for the benefit of creditors.
Meanwhile, Wells Fargo and Clearlake have agreed to provide debtor-in-possession financing of $37.5 million subject to court approval so THQ can continue to pay its bills.
Last month the Agoura Hills, Calif., company hired a firm to evaluate its strategic options. Its chief financial officer resigned late in the month.
The filing in bankruptcy court in Wilmington, Del., showed about $200 million in assets and $250 million in debt. The move doesn’t apply to foreign operations such as THQ’s business in Canada.
“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 THQ CEO Brian Farrell. “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.”
The company said it doesn’t plan to cut jobs as a result of the filing and that all employees will be paid as usual. Clearlake has asked the court for a schedule to complete the sale process in 30 days.