to Dilute Shareholders? THQ, Inc. (NASDAQ:THQI)
Posted by GDN News, Nov 29, 2012 07:32
It’s no secret THQ, Inc. (NASDAQ:THQI) is in dire straits. The question both investors and fans may be asking themselves probably is just how deep the company has sunk so far.
THQI recently lost their CFO Paul Pucino. Mr. Pucino left the company without providing a specific reason for his departure and did that in the midst of THQ negotiating a financing lifeline. The funds are to come from an undisclosed private placement and the deal could lead to ’significant dilution’ to common stockholders.
The company defaulted in covering credit facility debt earlier this month but has managed to arrange a forbearance with Wells & Fargo, giving THQI some borrowed time until January 15. The unpleasant part is that even with this time frame, THQ has no releases that could rack up revenue and help them seal the leaks of their ship. This leaves the private placement of equity as the only solution that could save the company.
THQI filed a delayed 10-Q that saw them logging a Q3 net loss of $20 million. The company’s three anticipated releases – Metro: Last Light, South Park: The Stick of Truth and Company of Heroes 2, have all been delayed. Despite the ’Metro (THQ)’ official Facebook page repeatedly affirming the new Metro game will be released in March 2013, Metro: Last Light still has no release date listed beyond Q1 of 2013.
THQ probably holds first place for most frequently and most generously discounted titles on the world’s largest online distribution platform – Valve Software’s Steam Store. Seeing how even new releases like Darksiders 2 were plagued by day-one DLC and more or less flopped shortly after release, both the company and investors may have something to worry about in 2013.
In yesterday’s trading THQI managed another 5% drop to a close of $1.08, now almost literally into penny stock territory.
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