As reported on Polygon.
By BRIAN CRECENTE
In a hearing in open court today, lawyers for those involved presented the seven sales to five publishers to U.S. Bankruptcy Court Judge Mary F. Walrath. The hearing ending without a final decision, but it appears to be all but a formality. The final decision will be made tomorrow.
“I wasn’t sure it was going to work, but I’m glad it did” Judge Marry F. Walrath, said when presented with the offers in open court.
Despite the judge’s enthusiasm, the offers were not met with uniform acceptance. One THQ investors group called it an “engineered sale by management to benefit management,” and said the company was worth a lot more than this piecemeal sale would raise.
The sales will raise $70 million if approved, with $29 million in purchased assets remaining, according to THQ attorneys presenting in court today.
Under the proposed sales:
- Sega will purchase Relic for $26.6 million, with Zenimax acting as a back-up bidder at $26.3 million.
- Koch Media will purchase Volition and Metro: Last Light for $22.3 million and $5.9 million respectively.
- Crytek will purchase Homefront for $500,000.
- Take 2 will purchase Evolve for $10.9 million, outbidding the game’s developer Turtle Rock.
- Ubisoft will purchase THQ Montreal for $2.5 million and South Park: The Stick of Truth for $3.3 million.
Some assets, including THQ’s publishing businesses and Vigil, along with some unnamed intellectual properties, are not included in the sale agreement. THQ officials said they’re still trying to find buyers for those.
Once approved, the sales are expected to close this week.
While Farrell and Rubin were careful to note that they couldn’t make any promises, they wrote that they expect most employees of the entities included in the sale will be offered employment by the new owners.
“However, we cannot say what these owners may intend, and there will likely be some positions that will not be needed under the new ownership,” according to the letter. “You should receive notice this week or early next week if the new owners intend to extend employment to you.
“If you are an employee of an entity that is not included in the sale, we regret that your position will end.”
THQ is keeping on a “small number” of their headquarters staff to assist with the transition, they wrote.
The company is also asking for the ability to offer certain severance pay to “minimize disruption for employees of non-included entities as they determine the next steps in their careers.”
Employees were told that there will be a meeting tomorrow to talk through the announcement and answer questions.
The decision to break up the company is the culmination of a tumultuous year for THQ and a very packed 24 hours. Yesterday morning, THQ received a competing bid for the operating business, along with the standing offer from Clealake and offers for separate assets, according to the letter. During the auction, which lasted more than 22 hours, the company came to the final conclusion that the most money would be made if the company were broken up and the assets sold piecemeal.
The letter and its news spread through Twitter as former THQ employees began reacting. The two page letter concluded with this personal note:
The work that you all have done as part of the THQ family is imaginative, creative, artistic and highly valued by our loyal gamers. We are proud of what we have accomplished despite today’s outcome.
It has been our privilege to work alongside the entire THQ team. While the company will cease to exist, we are heartened that the majority of our studios and games will continue under new ownership. We were hoping that the entire company would remain intact, but we expect to hear good news from each of the separate entities that will be operating as part of new organizations.
For those THQ employees who are part of entities that are not included in the sale, we are confident that the talent you have displayed as part of THQ will be recognized as you take the next steps in your career.
Thank you all for your dedication and for sharing your talent with the THQ team. We wish you the best of luck and hope you will keep in touch.
You can read the full letter here:
January 23, 2013
To All THQ Employees:
We now have the answers we’ve been seeking through our financial restructuring and Chapter 11 case. While much will be written, here are the facts of the bids and auction that occurred :
Yesterday morning, we received a competing bid for the operating business, along with Clearlake’s offer, and numerous offers for separate assets.
During an auction process that lasted over 22 hours, the final conclusion was that the separate-asset bids would net more than a single buyer for the majority of the company.
Shortly, we will, present the results to the U.S. Bankruptcy Court, which must concur with our assessment.
The proposed sales of multiple assets is as follows :
- Sega agreed to purchase Relic
- Koch Media agreed to purchase Volition and Metro
- Crytek agreed to purchase Homefront
- Take 2 agreed purchase Evolve and
- Ubisoft agreed to purchase Montreal and South Park
We expect these sales to close this week.
Some assets, including our publishing businesses and Vigil, along with some other intellectual properties are not included in the sale agreements. They will remain part of the Chapter 11 case. We will make every effort to find appropriate buyers, if possible.
What this means for employees
We expect that most employees of the entities included in the sale will be offered employment by the new owners. However, we cannot say what these owners may intend, and there will likely be some positions that will not be needed under the new ownership. You should receive notice this week or early next week if the new owners intend to extend employment to you. Please note that the terms of your new employment, including pay and benefits, may be different from the current terms of your employment with THQ.
If you are an employee of an entity that is not included in the sale, we regret that your position will end. A small number of our headquarters staff will continue to be employed by THQ beyond January 25 to assist with the transition. THQ has sufficient resources to pay these employees for work going forward, and we will be contacting these employees immediately to ensure their continued employment during this transition period. We are requesting the ability to offer certain severance pay to minimize disruption for employees of non-included entities as they determine the next steps in their careers.
We know you will have many questions about this news. We’ll be meeting tomorrow when we return to talk through this announcement and to answer any questions you have. You will receive a benefits fact sheet and FAQs with answers to some questions that may be on your mind. Please review these materials closely.
A personal note
The work that you all have done as part of the THQ family is imaginative, creative, artistic and highly valued by our loyal gamers. We are proud of what we have accomplished despite today’s outcome.
It has been our privilege to work alongside the entire THQ team. While the company will cease to exist, we are heartened that the majority of our studios and games will continue under new ownership. We were hoping that the entire company would remain intact, but we expect to hear good news from each of the separate entities that will be operating as part of new organizations.
For those THQ employees who are part of entities that are not included in the sale, we are confident that the talent you have displayed as part of THQ will be recognized as you take the next steps in your career.
Thank you all for your dedication and for sharing your talent with the THQ team. We wish you the best of luck and hope you will keep in touch.
Sincerely,
Brian Farrell
Chief Executive Officer
Jason Rubin
President