Troubled publisher THQ dropped more potentially bad financial news on Friday, revealing that it was in "certain defaults" on a $50 million credit facility with lender Wells Fargo.
The Agoura Hills based publisher of Darksiders, Saints Row and WWE wrestling games wouldn't clarify the conditions of the credit facility it has defaulted on, but did report "loan availability on the Credit Facility was less than 12.5% of the maximum revolver amount," a technical default of the terms of the loan. THQ tells Polygon that Wells Fargo continues to fund its requests while the two parties discuss the terms of their credit agreement.
In a filing with the SEC, THQ says it was notified by Wells Fargo on Nov. 7 that "one or more events of default have occurred under the terms of the Credit Facility, including the failure to comply with financial covenants" for the most recent quarter.
THQ entered into the $50 million revolving credit facility with Wells Fargo in 2011. The company borrowed $21 million from that credit facility during its third quarter, which ended Sept. 30.
THQ offered the update on its financial situation in a form filed with the SEC, notifying the commission of a late filing of its Form 10-Q, a quarterly report on the publicly traded company's financial position.
The publisher provided the following statement to Polygon when asked for clarification about its financial status.
"Today THQ filed a notification for a five-day extension to file our quarterly report (10-Q). The delay in the filing of our 10-Q has been caused by certain issues under the terms of our credit agreement with Wells Fargo. We are in discussions with Wells Fargo and believe we will reach an agreement with them to resolve these issues. Wells Fargo has continued to fund requests from us while we attempt to reach an agreement. We expect to file our 10-Q within the five days, on Tuesday, November 13, as required by the SEC."
Earlier this week, THQ posted a $21 million loss for the third quarter of its fiscal year. The company announced it was "evaluating strategic and financing alternatives" with investment banking and private equity firm Centerview Partners after it delayed three of its 2013 games: South Park: The Stick of Truth, Metro: Last Light and Company of Heroes 2.
Following THQ's dire earnings call on Monday, the publisher's stock plummeted, bottoming out at around $1.10 per share on Wednesday.
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