THQ “in discussions” to resolve “credit issue”

Wednesday, 14 November 2012 01:42 GMT By Brenna Hillier

THQ has filed a new financial report detailing its credit agreement with Wells Fargo, with president Jason Rubin providing a hopeful statement.

“As indicated in our quarterly report filed today, THQ is in discussions with Wells Fargo to resolve an issue with regard to our credit agreement,” Rubin said in a statement.

“We believe we will reach an agreement on this matter with Wells Fargo. The issue stems from a relatively small amount borrowed against the credit facility in mid-October 2012, which was subsequently repaid in full. THQ currently has $16.4 million outstanding on its facility, which is unchanged since we released second quarter earnings.”

THQ’s message remains largely unchanged since it first copped to defaulting on a repayment for its $50 million revolving credit with Wells Fargo; today’s release merely provides more details as to how the default occurred.

According to the new filing, THQ had borrowed $21 million towards the end of its second quarter, and when Wells Fargo looked over new details of the publisher’s accounts, it concluded the publisher was “over-advanced”. As such, it’s not that THQ missed a payment so much as its ongoing financial troubles caused Wells Fargo to re-assess the situation and crack down.

The default “repaid in full” Rubin mentioned was a $5.6 million payment THQ ponied up the day after Wells Fargo advised the publisher of the new technical default. That reduced THQ’s debt to $15.4 million, although it subsequently took another $1 million back as the companies negotiated.

THQ delayed three games in its most recent financial report, leaving it with no income expectations during the current quarter. It noted that Darksiders 2 under-performed, too, leading to bankruptcy fears, and a stock plummet. Ubisoft has expressed interest in buying up the ashes should THQ fold.

For those of a financial mind, the full SEC filing is available here.