Toshiba Agrees to Acquire OCZ SSD Business
The transaction should be final within 60 days.
Last week OCZ Technology group announced that due to its inability to comply with the terms of its loan with Hercules Technology Growth Capital, Inc., the SSD company was forced to file for bankruptcy. The depository accounts would be turned over to Hercules, and the company would be dissolved, not restructured.
"As previously reported, the Company is not in compliance with certain of the operating ratios and covenants in the loan agreement. As a result of such action and pursuant to Hercules' written instruction, the depository institutions disbursed the cash in the Company's respective accounts to accounts under the control of Hercules," stated OCZ's press release.
The company also announced that it received an offer from Toshiba Corporation to acquire substantially all of the company's assets in a bankruptcy proceeding. However, both parties have now reached an agreement, according to OCZ, where Toshiba will acquire OCZ's client and enterprise solid state drive business for $35 million in a chapter 11 bankruptcy proceeding.
"OCZ will continue to operate and serve existing and future customers during this process," states OCZ's press release. "Toshiba has agreed to provide the Company with DIP (Debtor-in-Possession) financing to ensure that there is adequate capital and flash supply to support the business during the contemplated sale period. The consummation of the asset purchase agreement is subject to an auction and approval by the bankruptcy court in the Company's bankruptcy case."
The acquisition will provide Toshiba with access to OCZ's proprietary controllers, firmware and software. The company will also have access to the teams responsible for bringing these solutions to market, in addition to OCZ's established brand and sales channels, the company said.
"This strategic opportunity will bring critical controller IP and NAND supply all under one global organization, allowing for an even more robust and competitive solid state solution offering for all of OCZ's and Toshiba's mutual customers moving forward," states the company's press release.
Ralph Schmitt, CEO of OCZ, points out that the company has suffered a tough year, facing NAND flash supply constraints and credit issues that have impacted OCZ's ability to satisfy the demands of its customers. These issues were combined with increased pricing pressure in the industry, which contributed to the company's on-going operating losses.
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"On an operational basis, we completed a complex investigation, several restructurings and a multi-year restatement that added significantly to our working capital requirements," stated Schmitt. "We have been working diligently on this partnership with Toshiba and we believe that this is the best outcome under our current corporate conditions."
Seiichi Mori, Vice President of Toshiba's Semiconductor and Storage Company and Corporate Vice President of Toshiba, said that the deal will strengthen Toshiba's SSD business. Toshiba announced in a separate press release that the transaction will be completed through a sale and auction process pursuant to Section 363 of the U.S. Bankruptcy Code, and subject to approval by the bankruptcy court supervising OCZ Technology's Chapter 11 bankruptcy.
"If Toshiba is selected as the successful bidder, subject to court and other regulatory approvals, the company expects to complete the acquisition in January 2014," the press release stated.
Kevin Parrish has over a decade of experience as a writer, editor, and product tester. His work focused on computer hardware, networking equipment, smartphones, tablets, gaming consoles, and other internet-connected devices. His work has appeared in Tom's Hardware, Tom's Guide, Maximum PC, Digital Trends, Android Authority, How-To Geek, Lifewire, and others.