THQ (NASDAQ:THQI), maker of the Saints Row series of video games, announced on Wednesday that it has filed for bankruptcy and will sell some of its assets.
Analysts attributed the company’s troubles to sluggish sales in a highly competitive market, as well as delays in the debut of several newer games. In recent regulatory filings, THQ said it was in default on a line of credit, Reuters noted.
Shares of THQ soared 27% in Thursday morning trading to above 45 cents a share.
The company also said private equity firm Clearlake Capital had agreed to become “stalking horse bidder” in THQ’s effort to sell assets, including its four development studios and various titles. Other parties may also bid on the assets.
Facing rising financial pressure, THQ has recently slashed its payroll and closed some operations to cut costs. It says it has negotiated $37.5 million in financing from Wells Fargo (NYSE:WFC) and Clearlake, which still must be approved by the bankruptcy court.
THQ, which competes against larger rivals like Activision Blizzard (NASDAQ:ATVI), has seen its market share fall. Over the summer, it announced a 1-for-10 reverse share split intended to prevent its stock from being delisted. THQ has also stumbed in competition with social media gaming.