THQ Falls on Talks Seen Diluting Investors: L.A. Mover
THQ Inc. (THQI), the video-game maker that’s in default on some debt covenants, fell as much as 7.2 percent after announcing talks that may lead to “significant dilution” for stockholders.
THQ fell 4.8 percent to $1.19 at 11:26 a.m. in New York after dropping as low as $1.16. The money-losing Agoura Hills, California-based maker of games including “Saints Row” had fallen 84 percent this year as of yesterday.
THQ said yesterday in a filing it entered into exclusive talks with an unnamed financial sponsor that could lead to “significant and material dilution to shareholders.” The company also said Chief Financial Officer Paul J. Pucino resigned. He may provide transition services through Dec. 3.
The company said on Nov. 13 that it was working with Wells Fargo Capital Finance LLC to resolve a technical default on its $50 million credit facility. The company said yesterday it reached a forbearance accord extending to Jan. 15 that will provide more credit.
The video-game publisher announced on Nov. 5 that it hired the investment bank Centerview Partners LLC to evaluate its options after delays in three titles strained its finances.
The three titles, “South Park: The Stick of Truth,” “Company of Heroes 2” and “Metro: Last Light,” need more work and will miss their March release dates, President Jason Rubin said on Nov. 5. The delays “will likely create a need for additional capital,” the company said.
Pucino was chief financial officer for almost four years, THQ said. The company has retained FTI Consulting Inc. (FCN) to assist the finance and accounting team while it evaluates alternatives for the position.
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