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THQ (THQI) Files For Chapter 11, Clearlake Capital Offers To Buy Assets

 December 19, 2012 03:34 PM
 


(By Balaseshan) THQ Inc. (NASDAQ: THQI), a video game manufacturer, said it has filed voluntary bankruptcy petitions under Chapter 11 and Clearlake Capital Group L.P. has offered to buy substantially all of the assets of its operating business.

THQ entered into an Asset Purchase Agreement with a "stalking horse bidder", affiliates of Clearlake Capital, 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.

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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 about $37.5 million, subject to Court approval.

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.

As part of the sale, the company is seeking approval to assume the contracts of these studios, and Clearlake will assume these contracts.

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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 about $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.

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.

THQI is trading 69.57% lower at $0.420 on Wednesday. The stock has been trading between $0.34 and $9 for the past 52 weeks.

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