Clearlake Offers to Acquire THQ’s Assets Via Section 363 under
Company Obtains Commitment for Interim
Financing to Fund Operations Without Interruption
AGOURA HILLS, Calif.--(BUSINESS WIRE)--Dec. 19, 2012--
THQ Inc. (NASDAQ: THQI), a leading worldwide developer and publisher of
interactive entertainment software, today announced that it entered into
an Asset Purchase Agreement with a “stalking horse bidder,” affiliates
of Clearlake Capital Group, L.P., to acquire substantially all of the
assets of THQ’s operating business, including THQ’s four owned studios
and games in development. The sale will allow THQ to shed certain legacy
obligations and emerge with the strong financial backing of a new owner
with substantial experience in software and technology.
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 approximately $37.5 million, subject to Court
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.
“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
According to Jason Rubin, who joined THQ as President last May, “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 serve as 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.
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.
As is the case after a Chapter 11 filing, THQ expects to receive notice
from NASDAQ informing the company that its shares will be delisted from
the exchange within nine calendar days of notification.
THQ is being advised by Centerview Partners LLC and FTI Consulting as
its financial advisors and Gibson, Dunn & Crutcher as legal counsel.
Clearlake is being advised by DLA Piper as legal counsel.
For additional information about THQ, please visit www.thq.com.
For information regarding the Chapter 11 case, please visit www.kccllc.net/thq.
Inc. is a leading worldwide developer and publisher of interactive
entertainment software. The company develops its products for all
popular game systems, personal computers, wireless devices and the
Internet. Headquartered in Los Angeles County, California, THQ sells
product through its network of offices located throughout North America
and Europe. More information about THQ and its products may be found at http://www.thq.com.
About Clearlake Capital Group
Clearlake Capital Group, L.P. is a private investment firm focused on
special situations and private equity investments such as corporate
divestitures, recapitalizations, buyouts, reorganizations, turnarounds
and other equity investments. Clearlake seeks to partner with
world-class management teams by providing patient, long-term capital and
operational expertise to invest in dynamic businesses. Clearlake
currently manages approximately $1.4 billion of equity capital, and
Clearlake’s founding principals have led over 50 investments totaling
more than $2.7 billion of capital in sectors including business
services, communication, consumer products/retail, defense/public
safety, energy/power, healthcare, industrials, media, and technology.
For more information, please visit www.clearlakecapital.com.
THQ Inc. Caution Concerning Forward-Looking Statements
This press release contains statements that are forward-looking
statements within the meaning of the Private Securities Litigation
Reform Act of 1995. These forward-looking statements are based on
current expectations, estimates and projections about the business of
THQ Inc. and its subsidiaries (collectively referred to as "THQ"),
including, but not limited to, expectations regarding the agreement with
Clearlake and the bankruptcy case. These statements are based upon
management's current beliefs and certain assumptions made by management.
Such forward-looking statements are subject to risks and uncertainties
that could cause actual results to differ materially from those
expressed or implied by such forward-looking statements, including, but
not limited to, the adverse impact of the bankruptcy case on THQ’s
business, financial condition and results of operations, including its
ability to maintain customer and supplier relationships, THQ’s ability
to obtain bankruptcy court approval in connection with the bankruptcy
case, the actions of THQ’s creditors and other third parties with
interests in the bankruptcy case, competitive, economic, legal,
political, and technological factors affecting our industry, operations,
markets, products, or pricing. Readers should carefully review the risk
factors and the information that could materially affect THQ's financial
results, described in other documents that THQ files from time to time
with the Securities and Exchange Commission, including its Annual Report
on Form 10-K for the fiscal period ended March 31, 2012 and subsequent
Quarterly Reports on Form 10-Q, and particularly the discussion of
trends and risk factors set forth therein. Unless otherwise required by
law, THQ disclaims any obligation to update its view on any such risks
or uncertainties or to revise or publicly release the results of any
revision to these forward-looking statements. Readers are cautioned not
to place undue reliance on these forward-looking statements, which speak
only as of the date of this press release.
Source: THQ Inc.
The Abernathy MacGregor Group, Inc.
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Owen Blicksilver Public Relations, Inc.
THQ Inc. Investor Relations