THQ's current financial woes appear to be escalating rapidly, as the company has now defaulted on some part of a $50 million credit facility it has with lender Wells Fargo.
As part of a new SEC filing, THQ revealed that financial services company Wells Fargo says the publisher has caused "one or more events of default" to occur, having failed to fulfill certain obligations set in the loan agreement.
As a result, Wells Fargo is continuing to fund requests from the company while it tries to reach an agreement on the defaulted instances -- however, it was noted that there can be no assurance that an agreement will be met.
THQ entered into the credit facility with Wells Fargo in September of last year. The facility has a four-year term, meaning that THQ must have paid back all outstanding debts by that time.
In line with the news, THQ also admitted that it is not able to file its quarterly 10-Q report -- a U.S. Securities and Exchange Commission report that is compulsory and must be filed by all publicly traded corporations.
THQ said that it was not able to file the report in time "without unreasonable effort or expense," and that it expects to have it ready within a five day extension period.
Update: On Tuesday, November 13, THQ managed to file its 10-Q report, with president Jason Rubin issuing a statement saying that the company expects to resolve the dispute with Wells Fargo.
There is, as the report says, no guarantee that this will happen.
"THQ currently has $16.4 million outstanding on its facility, which is unchanged since we released second quarter earnings," he said.
You know...I understand people want news and if you're an investor this is the sort of thing you would definitely want to know. But...I always wonder how much media contributes to destroying business, did stock drop because people knew beforehand or did it drop because everyone read news articles like this and then dumped all their shares in panic created by said news articles.
It would seem a self fulfilling prophecy, news articles warn company may be in trouble, investors read news article and sell all their shares quick, news articles confirm company definitely is in trouble....now at least.
The delta between what is "known" and what is actually going on at THQ is enormous and always has been. The real insight is that the numbers they are compelled to make public under SEC rules don't really tell the story anyways (although they do tell a bleak story).
The real story is CHRONIC mismanagement, talent drain, a CEO who remains after the stock has lost over 90+ % of it's value in 2 years, no coherent, long term strategy, no sincere, thoughtful investment in proprietary, repeatable technology etc. etc.
The fact is - ALL of this has been widely known. There have been people on THIS VERY forum saying OUT LOUD in clear, detailed fashion - THQ IS IN TROUBLE for YEARS.
It literally boggles my mind how completely out of touch the investment "pundits" are with what's actually going on in these companies.
I agree. As I said in the last news update, THQ is dying. We aren't saying it out of spite, we are simply pointing out the facts. You can run from reality, but no matter how fast you are, reality catches up.
Beyond Good and Evil: there is a trojan on that web site you linked... Google Chrome warned me and I decided to try my luck with IE. Sure enough, Windows Alert catched it.
It would seem a self fulfilling prophecy, news articles warn company may be in trouble, investors read news article and sell all their shares quick, news articles confirm company definitely is in trouble....now at least.
The real story is CHRONIC mismanagement, talent drain, a CEO who remains after the stock has lost over 90+ % of it's value in 2 years, no coherent, long term strategy, no sincere, thoughtful investment in proprietary, repeatable technology etc. etc.
Nightmare and you're not waking up from it.
It literally boggles my mind how completely out of touch the investment "pundits" are with what's actually going on in these companies.
Don't even get me started about Atari.
It's criminal.
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