THQ has entered into a forbearance agreement with finance company Wells Fargo Capital Finance, extending the amount of time the company has to pay back its debts until January 15, 2013.
Under the agreement, "Wells Fargo has agreed to forbear from exercising its rights and remedies against THQ and its subsidiaries with respect to previous events of default under its credit facility."
The forbearance agreement prevents legal action from being taken against the company for failing to meet its credit deadlines. Wells Fargo has also "agreed to make additional loans to the company" throughout the period of the agreement.
THQ confirmed earlier this month that it had $16.4 million "outstanding on its facility".
A potential buyout may still be on the cards, however. Last night, CEO Brian Farrell confirmed that the firm is "evaluating financial alternatives that will transition the company into its next phase."
THQ also revealed that it had "entered into exclusive negotiations with a financial sponsor regarding financing alternatives which may result in, among other things, significant and material dilution to shareholders."
In light of the firm's latest financial problems, THQ announced that its executive vice president and chief financial officer Paul Pucino had resigned.
"We would like to thank Paul for his significant contributions over the past four years and wish him well in his future endeavors," commented Farrell.
However, THQ's credit agreement will only "delay the seemingly inevitable", Wedbush Securities analyst Michael Pachter suggests, who estimates that the company is burning cash at a rate of $15m/month.
And following the decision to delay Metro: Last Light, Company of Heroes 2 and South Park: The Stick of Truth, Pachter thinks that "liquidity is a major concern".
"With a history of game delays and faulty forecasting, and a cash burn that we estimate to be close to $15 million per month ($10 million for R&D and $5 million for other expenses), revenue generation is essential to keep THQ operating, and we question the duration of the company’s viability as a public entity," he said.
"We think that the company's line of credit will terminate early next year, as we think it is unlikely to satisfy its forbearance conditions."
He continues: "THQ's situation continues to deteriorate dramatically, and it has been in turnaround mode for the last five years. The recent game delays, hiring of a financial advisor, financial sponsor negotiations, and refusal to take questions after reporting Q2:13 results increase our scepticism that a turnaround plan can be
executed before the company runs out of cash.
"We do not believe THQ is investable for most institutions."