It has not been a very good year for publisher THQ, but with any luck there may be a little light at the end of the tunnel.
Today it announced that its executive vice president and CFO Paul Pucino has resigned, and that it is in “exclusive negotiations” with a potential financial sponsor to help cover payments on the loan it defaulted on a few weeks back.
Signs of THQ’s struggles have been eminent since last year, with:
- The closure of its development houses THQ Brisbane and Blue Tongue in August 2011
- A $55.9 million loss in its quarter ending December 2011
- The decline of its stock value since early 2011
- The delay of its three upcoming releases South Park: The Stick of Truth, Company of Heroes 2 and Metro: Last Night to 2013
- The slashing of over 100 jobs across North America in March 2012
- The cancellation of the MMO portion of Warhammer 40,000: Dark Millenium in March 212
- The dropping of Guillermo del Toro’s game inSANE as well as Tomonobu Itagaki’s game Devil’s Third in May and July 2012
- The closure of its Melbourne office in October 2012
- And this month its default on a $50 million loan from Wells Fargo.
But it’s not all bad news: today THQ has reached a forbearance agreement with Wells Fargo, so WG will not be seeking legal action until January 15, 2013, giving THQ a little breathing space. In the meantime WG will continue making additional loans to THQ.
Due to the delay of its three upcoming titles to 2013, THQ will not be receiving any significant revenue to pay back Wells Fargo, and as a result have entered into “exclusive negotiations” with an unnamed potential sponsor. If those negotiations go well, it’s good news for THQ, but bad news for investors, as the cash injection “may result in, among other things, significant and material dilution to shareholders.”
Let’s hope that those negotiations prove fruitful, because if they don’t, we could be seeing some serious repercussions for the struggling publisher.