Bankruptcy for THQ as it looks to sell

THQ has filed for bankruptcy – but as part of a plan to ultimately strengthen the business and hopefully find it a new owner.

The publisher this evening announced it had agreed to sell the majority of its US assets, including its publishing operation and four studios, to affiliates of investment firm Clearlake Capital Group in a ‘stalking horse bidder’ deal.

The company’s foreign operations, including Canada, are not included in the filings.

There will be no redundancies as yet and the firm says the business, its customers and retailers will not be effected as it shapes up.

Its shares will, however, be removed from the stock exchange.

Stalking horse bids are used to test market interest in an acquisition target and improve sales conditions – in this case an attempt to sell on THQ’s business before any break-up of the US operation and its studios is necessary. Bankruptcy would effectively wipe out THQs debts, while the temporary sale would secure the business’ future as the publisher looks for a new permanent owner.

A statement from the firm said: "THQ will continue operating its business without interruption during the sale period, subject to Court approval of THQ’s first-day motions. All of the company’s studios remain open, and all development teams continue. The company remains confident in its existing pipeline of games. THQ maintains relationships with some of the top independent development studios around the globe. As part of the sale, the company is seeking approval to assume the contracts of these studios, and Clearlake will assume these contracts."

It also added: "Consumers and retailers should see no changes while the company completes a sale. The new financing will support business operations throughout the period. THQ does not intend to reduce its workforce as a result of the filing, and employees will continue to work their usual schedules and receive normal compensation and benefits, pending customary Court approval."

Exec statements from CEO Brain Farrell and president Jason Rubin also asserted their ultimate confidence in the business despite its financial hardship.

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 Farrell, also chairman.

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.”

Rubin, who joined only in May as the firm moved to revamp its business, added: 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.”

THQ’s upcoming games include South Park: The Stick of Truth, Company of Heroes 2, Metro: Last Light and Homefront 2.