Shares of THQ Inc. fell 12 percent on Tuesday after the struggling video game developer announced that has entered into exclusive negotiations with a financial sponsor that could result in significant dilution for existing shareholders.

The Agoura Hills company, known for its "Saints Row" franchise and World Wrestling Entertainment-license games, also announced that Chief Financial Officer Paul Pucino had resigned. THQ did not provide a reason for Pucino’s departure, but said that it had retained FTI Consulting to assist its finance and accounting team for now.

THQ, which has laid off staff and closed studios to cut costs and refocus the company, said late Tuesday that if an agreement was signed with the unnamed sponsor, the terms "may result in, among other things, significant and material dilution to shareholders.”

Additionally, the company said that Wells Fargo Capital Finance LLC has agreed to forgo taking action against it on any default on THQ’s $50 million credit facility until January 15. The bank warned the company last week that it had borrowed beyond the limits of its loan terms, according to an earlier regulatory filing.

The announcements come in the wake of THQ’s recent hiring of Centerview Partners LLC to help evaluate financing and improve liquidity.

Shares on Wednesday closed down 15 cents, or 12 percent, to $1.10 on the Nasdaq.