SGI lists bankruptcy as option
BY ROD STETZER / THE CHIPPEWA HERALD
If measures such as selling the company fail, SGI will consider bankruptcy, the troubled computer maker said Thursday.
The Mountain View, Calif.-based company has its manufacturing facilities and other offices in Chippewa Falls. As of June 25, it had 2,655 employees worldwide.
In its annual report to the Securities and Exchange Commission, SGI said:
n It expects its stock to be booted off the New York Stock Exchange.
n It is participating in an internal investigation of anonymous allegations and allegations by an ex-employee whether computer systems were delivered to China in violation of U.S. export laws. SGI said it has shared information about its investigation with the U.S. Department of Commerce.
SGI said its alternatives include finding what it calls a strategic partner or acquirer, find someone to make a substantial investment in the company, sell off technologies and products, or a combination of the choices.
But SGI said it can not guarantee any of that would happen.
"If we fail to implement one or more of these alternatives successfully, we could be forced to seek protection under bankruptcy laws," the company said.
SGI's stock has floundered below $1 for months. That's the minimum price set by the New York Stock Exchange to continue listing a stock. In May, the exchange told SGI it would consider delisting the stock.
"Based on recent discussions with the NYSE, we believe that it is likely that the NYSE will suspend trading in our common stock and 6.5 percent senior secured convertible notes due June 1, 2009 in the near future," the company said.
SGI is looking at alternatives, including listing the stock on the Over The Counter Bulletin Board.
"However, we cannot provide any assurance that our securities will be quoted on the OTC Bulletin Board or on any other quotation service if they are delisted by the NYSE," SGI said. That, in turn, could hurt the company's liquidity, price of its stock, its convertible notes "as well as adversely impact our future access to capital markets."
In the annual report, SGI lists its holdings. In Chippewa Falls, the company owns 324,000 square feet of buildings and leases another 125,000 square feet. It is not using 50,000 square feet. The company said the lease term ends in 2008.
SGI has laid off 39 employees from its Chippewa Falls plant in 2005 as part of a restructuring of the company.
On Sept. 14, the company reached an agreement with Wells Fargo Foothill, Inc. and Abelco Finance, LLC for up to $100 million in financing. It says the financing agreement is expected to be completed next month.
Reach Rod Stetzer at rstetzer@chippewa.com.
What SGI says
"In light of these challenges, our Board of Directors is evaluating a range of strategic alternatives with the goal of preserving and creating value for the benefit of stockholders and creditors.
"Alternatives include pursuing our current strategy as an independent public company, seeking a strategic partner or acquirer, seeking a financial partner to make a substantial equity investment, divesting additional technologies or products, or some combination of the foregoing.
"We cannot assure that any acquisition or other change in control transaction will occur, or that if such a transaction does occur that it would result in stockholders realizing value equal to or greater than the current trading price of our common stock.
"If we fail to implement one or more of these alternatives successfully, we could be forced to seek protection under bankruptcy laws."
Source: SGI filing with SEC |
