(Changes game title to "Saints Row" in 7th paragraph)
By Malathi Nayak
SAN FRANCISCO Nov 20 Video game publisher THQ
Inc said on Tuesday that it has entered into exclusive
talks with a financial sponsor for potential financing
The Agoura Hills, California-based company, which has cut
staff and shut non-core businesses in an effort to revive its
business, did not provide further details while negotiations
The agreement "may result in, among other things,
significant and material dilution to shareholders," it said.
Paul Pucino, its executive vice president and chief
financial officer, has resigned, the company said in a press
The company added that Well Fargo Capital Finance LLC has
agreed to forgo taking action against the games publisher on any
default on its $50 million credit facility until Jan. 15, 2013.
THQ's shares rose 12 percent and closed at $1.25 in the
regular Nasdaq session.
Known for its wrestling and "Saints Row" games, THQ also
said that it had hired Centerview Partners LLC to help evaluate
financing and improve liquidity.
THQ has been losing ground to larger rivals including
Activision Blizzard Inc. The company's stockholders
approved a 1-for-10 reverse share split of its common stock in
late June to raise its stock price and avoid being delisted.
In a Securities and Exchange Commission filing last week,
THQ said Wells Fargo warned the company on Oct. 16 that it had
borrowed beyond the limits of its loan terms.
THQ then made a $5.6 million payment on the $21 million that
it had borrowed in the quarter ending Sept. 30 in an attempt to
regain compliance under its loan agreement. Wells Fargo then
informed the company that it was in default under the terms of
its credit facility, according to the filing.
Executives announced on a Nov. 5 earnings call that they
were postponing the release of several titles including its
"South Park" game, increasing the company's need for capital.
The company also has $100 million in convertible notes that
are due in August 2014.
(Reporting by Malathi Nayak; Editing by Tim Dobbyn and Bob