NEWS: Iomega is in serious contention to purchase Syquest...
SyQuest Deal Still A Possibility
By Joseph F. Kovar
Fremont, Calif.
8:09 PM EST Tues., Dec. 08, 1998
..............
The sordid saga of SyQuest Technology Inc. continues, although an
end may be in sight.
SyQuest's current troubles started on Oct. 28 when a major lender
decreased the storage maker's line of credit. The company closed
its doors five days later on Nov. 2.
In the days following SyQuest's collapse, a white knight appeared
and expressed interest in buying the company's technology and
intellectual property.
"We delayed filing Chapter 11 Bankruptcy for so long because the
discussions were going so well," said a source close to the
negotiations.
The source said removable storage rival Iomega Corp., Roy, Utah,
was the potential buyer.
"But they wouldn't make an offer, because they didn't want to
assume any liability," the source said. "This also gave them an
opportunity to buy only the technology pieces they wanted."
SyQuest offcials finally filed for bankruptcy protection with the U.S.
Bankruptcy Court in Oakland, Calif. on Nov. 18 to protect the
company's remaining assets. SyQuest then immediately signed a
letter of intent for sale to Iomega of all its assets, including patents,
intellectual property, manufacturing and development equipment,
finished goods and raw material inventory.
But the court extended the Nov. 25 deadline for resolution of the
sale until Dec. 9, in part because a second suitor made a bid for
what remained of SyQuest, based here. The source would not
reveal the other potential buyer.
"We all secretly hoped that things would work out and the white
knight would come in, but it fell through at the eleventh hour." If that
had happened, he said, SyQuest's finished goods could have been
rushed to market for the lucrative Christmas buying season. The
source said that if the court acts quickly, it would still be possible to
recover some holiday sales.
Though the parking lot is empty and the building apparently
deserted, "there still are people working in there, trying to hold
things together until the courts decide what to do," the source said.
"But the core of the company is gone,out there looking for jobs."
The court's decision on a buyer could come as early as
Wednesday.
"I still have a deep desire that someone will come and try and keep
the brand alive and, more importantly, support the loyal SyQuest
customers,not just buy the technology and put it away," the source
said.
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