THQ - Bankrupt - but there's a new owner

THQ has apparently filed for Chapter 11 bankruptcy as preparation for a sale to Clearlake Capital Group. According to Gamasutra, it's business as usual during the transition and game development contracts shouldn't be affected. For us, that means South Park (hopefully) continues on:

Troubled game publisher THQ is handing over its U.S. operations to a new owner.

Clearlake Capital Group is fronting $60 million to acquire THQ's business, including its four U.S. development studios (Vigil, Volition, THQ Wireless and THQ Phoenix). In order to facilitate the sale, THQ filed for Chapter 11 bankruptcy on Tuesday.

THQ says that operations will resume as normal during the transition, should the bankruptcy court approve.

"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," CEO Brian Farrell said in a statement.

According to THQ, Clearlake plans on inheriting all of its existing contracts with outside development studios.

More information.

the execuitves will most likely make off with the millions made form the humble sale, while untold workers are soon to be without work, pensions, or medical coverage—THQ makes EA look like mother teresa

We all saw this coming. Just remains to see who buys the ip's and studios. Clearlake Capital Group is a middleman to sell off company's piece by piece.

My money is on Activision or EA.

Originally Posted by Couchpotato
We all saw this coming. Just remains to see who buys the ip's and studios. Clearlake Capital Group is a middleman to sell off company's piece by piece.

My money is on Activision or EA.

UBISoft once mentioned that THQ have IPs that interest them.

Originally Posted by SpoonFULL
UBISoft once mentioned that THQ have IPs that interest them.

Well there as bad as the two I mentioned so that's not good either.

Originally Posted by Couchpotato
Clearlake Capital Group is a middleman to sell off company's piece by piece.

"Stocking Horse Bidder" and Assuming Contracts

As best as I can tell, they don't appear to be situating themselves as a chop shop to break down the US operations and sell them for parts. At least the business-news articles seem to suggest they've agreed to terms under which that would be a less-than-optimal outcome for them compared to either owning-operating the company whole or being outbid.

http://www.marketwatch.com/story/thq…-lp-2012-12-19


Here they're acting as what is called a "stalking horse bidder" - a term for a company that places an agreed upon initial bid for the company to serve as the minimum (its a real bid and they do buy the company if nobody bids higher.) In this case specifically they placed a bid on the entirety of their US assets (non-US operations are not part of this filing) for approximately $60 million and have offered an additional $10 million note to secure aggreement for the conditions of the sale from the creditors. One of these conditions is that they - Clearlake - assume existing contracts with third party developers.

They are paying the $10 million to the creditors and assuming the contracts regardless of how bidding proceeds, but would only be buying the assets if they are not outbid in the next 30 days. The deal for continuing normal operations means that THQ will retain any value a potential bidder might see in its talent pool since they won't be hemorrhaging staff or accruing back-wages-owed for failing to pay them like some studios that have made the news this year.

What These Terms Might Suggest

This suggests a few things about the intentions of Clearlake as well as the presumed intentions of potential bidders (including Clearlake if nobody else takes it.) First it says that Clearlake sees some particularly valuable properties in those publishing contracts since they're assuming all the existing obligations/liabilities of them and will only turn a profit on them if they can rather quickly find publishers willing to pay a cut for the publishing rights and assume those responsibilities and even then probably only if they release successfully.

Second it says that Clearlake believes that the US assets are at least worth enough for them to risk spending $60 million AND assume WARN obligations to carry those employees for at least 60 days - THQ could have claimed the faltering business exemption and potentially let employees go up to this very point but neither Clearlake nor anyone who outbids can. This suggests they believe that either it is worth getting the company intact and operating a that price to own as an investment, or that they'll make enough money on one or more of the publishing deals that they don't have to maximize profits by avoiding carrying all that staff while lengthening the turn-around time on selling it for parts, or that someone else will want the company intact and this will help ensure they don't actually get stuck with it.

Finally it also says that Clearlake is more eager to act as a sort of reverse agent for the publishing deals (taking a cut from the publisher side) than it is in THQ itself. If this wasn't the case they wouldn't have crafted a deal where they get those contracts no matter what while only committing a lowest possible bid for the rest. In any of the likely scenarios they are expecting that if they do pay $60 million for it plus the $10 million note plus 60 days continued salaries that at the very least they won't lose so much on THQ's US operations and assets to offset what they expect to make on the assumed contracts.

Apparently they also own something called "Smart Sand," "Jacuzzi" and "Sensible Portions"

jhwisner-

You put it in a more flowery and sensible way that's all. There still a credit group and money is there #1 objective even if it means chopping up THQ.

Right now they are sensible but who can say in a few months when revenue is still in the red.

Was waiting to happen.

I'm 99% sure the names we'll see in the end are EA and/or Ubisoft. And then DA3 and HoMM7 will look and feel like company of heroes without tanks.

Originally Posted by joxer
I'm 99% sure the names we'll see in the end are EA and/or Ubisoft. And then DA3 and HoMM7 will look and feel like company of heroes without tanks.

DA3 is already going to look like Battlefieds joxer.

Finally : THQ is down. Now Funatics MIGHT be finally be able to buy their IP back …
I just din't like THQ. Period.

I just don't understand the "company X is in it for the money" complaint. Newsflash: companies exist to make money. Companies that don't make money end up like, well, THQ. What gripes me isn't that companies try to make money, it's that so many of them are so damn bad at it — cutting corners trying to maximize profits now at the cost of their long-term viability.

Originally Posted by khaight
I just don't understand the "company X is in it for the money" complaint. Newsflash: companies exist to make money. Companies that don't make money end up like, well, THQ. What gripes me isn't that companies try to make money, it's that so many of them are so damn bad at it — cutting corners trying to maximize profits now at the cost of their long-term viability.

There a credit group money is there main focus that's the truth put in the correct context this time. Yes THQ is to blame with there poor management and THQ's "revolutionary" uDraw failed project.

Originally Posted by curious
the execuitves will most likely make off with the millions made form the humble sale, while untold workers are soon to be without work, pensions, or medical coverage—THQ makes EA look like mother teresa

Pensions!? Jeez - I might take a pension from a government but even that strikes me as dubious. I would hope THQ was using the 401K model instead.

Well here we go.

Update: THQ has posted a reponse to the bankruptcy news, stating that the Clearlake deal isn't yet fully nailed down, as THQ is waiting to see if any other offers come in first.

"Our Chapter 11 process allows for other bidders to make competing offers for THQ," says Jason Rubin, President of THQ. "So while we are extremely excited about the Clearlake opportunity, we won’t be able to say that the deal is done for a month or so."

So it's not finalized yet and the dreaded other three company's just might bid on the ip's. Also Relic is indeed included with the sale.

Clearlake Capital Group was going to front $60 million to acquire THQ's business, including its four development studios (Vigil, Relic, Volition and THQ Montreal) and all of its games currently in development. In order to facilitate the sale, THQ filed for Chapter 11 bankruptcy on Tuesday.

It's not just there US division or ip's it's everything they own.

Some more news now.

Ubisoft planning to buy THQ

Before THQ declared bankruptcy Ubisoft had already shown interest in buying the intellectual property of THQ, so it is not surprising that the French company now has plans to acquire the assets of THQ.

According to the sources of MCV, Ubisoft is in discussion with the Clearlake Capital Group, the firm that is financing the THQ while the bankruptcy process unfolds, to reach an agreement.

But it is given to understand that Ubisoft has no intention of making an offer until THQ is forced to sell their property. In this situation, Ubisoft can buy the series from THQ and licenses for a bargain.

The desire for Ubisoft is to become the largest publisher in the videogame market, and that series has sold millions as Assassin's Creed, Just Dance, Splinter Cell and Far Cry. With the addition of games from THQ, your wish may come true.

Link-http://www.bubblews.com/news/84324-u…ing-to-buy-thq
Link-http://www.ign.com/articles/2012/12/…17e3372600002b

hmm, Ubisoft making the next Saint Rows or Company of Heroes…

Originally Posted by azarhal
hmm, Ubisoft making the next Saint Rows or Company of Heroes…

Well that'll mean the wackyness of certain weapons will be part of an integratedonline feature set that will seem to users to provide no other functionality besides turning their giant purple dildo bat into a boring old piece of rebar if they lose connectivity - which they will.

Originally Posted by Couchpotato
Also Relic is indeed included with the sale.

I do hope that they'll be able to buy themselves free again, too.