THQ Inc. (THQI:US), maker of the “Saints Row” and “Company of Heroes” video-game franchises, won court approval of a bankruptcy loan to help fund operations as it pursues a sale of virtually all its assets.
U.S. Bankruptcy Judge Mary F. Walrath granted THQ interim approval to borrow as much as $6.5 million at a hearing today in Wilmington, Delaware. Walrath scheduled a Jan. 4 hearing to consider approving the full amount of the loan, as much as $37.5 million, and the company’s proposed sale process.
THQ reached an agreement before filing for bankruptcy to sell its assets to Clearlake Capital Group LP in a deal valued at about $60 million. The company wants the court to approve guidelines for a Jan. 9 auction, which would require potential buyers to submit bids by Jan. 8, followed by a Jan. 10 hearing to approve the sale, according to court documents.
Walrath said she wants more details and possibly testimony to support the game-maker’s aggressive sale timeframe.
“Management and Clearlake want to ram this sale through” under a process that wouldn’t afford potential bidders enough time to seriously evaluate the assets, said Paul N. Silverstein, a lawyer representing noteholders.
Jeffrey C. Krause, THQ attorney, said that while the timeframe is “very truncated” and “not ideal” during the holiday season, the alternative would be a Chapter 7 liquidation because the company would run out of money by mid-January. “We will liquidate because we don’t have an option,” Krause told Walrath.
THQ listed assets of $204.8 million and debt of $248.1 million in Chapter 11 documents filed yesterday. The company said it was forced to seek court protection after sustaining losses for the past five fiscal years.
Recent losses were tied to its “uDraw” peripheral device for the Nintendo Wii, Sony PlayStation 3 and Microsoft Xbox 360 gaming consoles, which let users bring their drawings to life on their television screens. While the uDraw had early success on the Wii, the PlayStation and Xbox versions “fell far short of expectations,” according to court papers.
“Saints Row,” with more than 11 million units shipped globally, is THQ’s most-successful franchise, according to a May press release. THQ also published the “Darksiders” and “Red Faction” franchises, according to its website.
The video-game maker said it required more time for some titles and had to delay the March introductions of “South Park: The Stick of Truth,” based on the popular adult cartoon show from Matt Stone and Trey Parker; “Company of Heroes 2” and “Metro: Last Light.”
The case is In re THQ Inc., 12-13398, U.S. Bankruptcy Court, District of Delaware (Wilmington).
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