killer_roach wrote on Nov 11, 2012, 15:12:NewMaxx wrote on Nov 11, 2012, 14:47:
Companies default all the time. Sometimes it's news, sometimes it's not, but of course they have to report it to the stock exchange. I don't think this was an unexpected event in any regard. There will be a restructuring/renegotiation of debt, and the commission of future milestones, at which point there might be another renegotiation, and so on.
The modern world of finance has its roots a thousand years back (feudal kings did this all the time), but to spare the public a history lesson, essentially imagine THQ as a nation-state who borrows money from a rich trade state so that it can field an army with the intent to expand its domain. It fails to meet this goal and is thus unable to pay as anticipated, but still is able to pay something and still seeks to eventually achieve its goals and avoid the alternative of bankruptcy.
Except THQ is hemorrhaging cash - they're losing money greater than their market cap on a quarterly basis, with no real pathway back to profitability. With a default comes likely downgrades to their credit rating as creditors worry about their ability to satisfy current debt obligations (if their debt instruments aren't C-rated already, they likely will be now), which likely will constitute increased costs to their debt service, further hastening their debt spiral.
Your argument only holds water in the situation where THQ had a clearly outlined path back to profitability, which they don't. This default isn't a temporary setback - it's a symptom of further underlying issues. Without even a current accounts surplus on the horizon (much less an overall profit), it's only a matter of time before the sharks start to circle (if they haven't already).