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BREAKING NEWS: THQ files for bankruptcy!

So, yesterday saw leading developer and publisher, THQ Inc. announce that it entered into an Asset Purchase Agreement with what they called, a “stalking horse bidder,” affiliates of Clearlake Capital Group, L.P., to acquire essentially, every working part of THQ’s operating business, including THQ’s four studios and games in development. These games include Metro: Last Light, Company of Heroes 2, South Park: The Stick of Truth, Saints Row 4 and WWE ’14.

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 just over £20 million ($37.5 million), subject to Court approval.

THQ announced that they will continue operating its business without interruption during the sale period, subject to Court approval of THQ’s first-day motions, but we will have to see how that works out. All of the company’s studios are going to remain open, and all of the development teams will continue. The company remains confident in its existing pipeline of games. 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.”   

Jason Rubin, who joined THQ as President last May, said, “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 be 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.

As I previously stated, we should see no major issues while this process is carried out. Saints Row 4 is the one I am most concerned about, with such a great storyline that has grown over the years, it would be a shame to see it go down the drains at this stage.