Take-Two to Take Over Development of WWE Games From THQ
Stock Chart for THQ Inc (THQIQ)
THQ’s agreement reached with the maker of the “Grand Theft Auto” video-game franchise, WWE and Yuke’s Co., a Japanese- based game-developer that was contracted by THQ to help produce the wrestling video games, will save the company millions by reducing claims against the bankrupt video-game maker, according to court documents filed yesterday.
“By working together to transition development of WWE games going forward the parties have minimized the harm to WWE and Yuke’s, which have, in turn, agreed to substantial reductions of their claims” against THQ, lawyers for the company said in court papers. The lawyers said without the agreement, WWE and Yuke’s claims “would certainly exceed $30 million and might exceed $60 million.”
THQ, the maker of the “Saints Row” and “Company of Heroes” video games, failed in its effort to survive the bankruptcy reorganization intact as individual titles and studios were gobbled up by competitors at an auction last month. Most of its assets were sold at the auction, bringing in about $72 million. The remaining assets at the company, including the “Darksiders” franchise, are worth about $29 million, according to THQ attorney Jeffrey C. Krause.
Under the accord, the WWE and Yuke’s contracts will be terminated and the companies will be allowed to enter into new agreements with Take-Two, which will hire THQ’s employees that work on the wrestling games, according to court documents.
The deal will also “eliminate very large damage claims” that would have otherwise materialized from terminating the contracts, according to the court filing.
WWE agreed to waive its pre-bankruptcy claims of about $45 million and any claims for annual royalty advances of about $7.5 million for the licensing contract that would have run through 2017. THQ will pay WWE $650,000 in royalty payments for the WWE games sold while under bankruptcy protection.
THQ owns about 14 percent of Yuke’s equity and has agreed to give the Japanese developer the 1,552,000 shares, about $4.5 million in value, in exchange for a release of Yuke’s pre- bankruptcy claims of about $15 million to $20 million. Yuke’s will also get a $250,000 royalty payment.
The Agoura Hills, California-based video-game maker said it was forced to seek bankruptcy protection after sustaining losses for the past five fiscal years. The company listed assets of $204.8 million and debt of $248.1 million when it sought court protection on Dec. 19.
The company was devastated by recent losses tied to the “uDraw” peripheral device for video-game consoles. While the device that lets users reproduce their drawings on their television had early success on Nintendo Co.’s Wii console, the versions for Sony Corp.’s PlayStation 3 and Microsoft Corp.’s Xbox 360 struggled to gain traction and “fell far short of expectations,” according to court documents.
The case is In re THQ Inc., 12-13398, U.S. Bankruptcy Court, District of Delaware (Wilmington).
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