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Technology Stocks : SYQUEST -- Ignore unavailable to you. Want to Upgrade?

To: The Osprey who wrote (7367)	10/29/1998 8:09:00 AM
From: KM	Read Replies (1) \| Respond to of 7685

Here's Herb's commentary. Didn't he recommend a purchase of Syqyest stock last year? Herb on TheStreet: Is SyQuest on Its Last Poor, Pathetic Legs? By Herb Greenberg Senior Columnist 10/29/98 6:30 AM ET The Thursday Thud • From pathetic to, uh, even more pathetic: That pretty much describes the story of SyQuest (SYQT:Nasdaq), the Iomega (IOM:NYSE) wannabe that clearly may never be more than an asterisk in Silicon Valley history. Just when you thought it couldn't get any worse, the company disclosed in a Securities and Exchange Commission filing late Tuesday that as of Sept. 30 it was not in compliance with loan agreements to its lead lender. The lender, Greylock Business Credit, didn't put the company into default but reduced its credit line to $10.7 million from $30 million. As a result, SyQuest said it had fully exhausted its credit lines and has no other sources of "significant" debt financing. And that's the good news. The company risks being delisted from the Nasdaq if it can't keep its stock above $1 for 10 consecutive days by Dec. 14. (Lotsa luck; so far, not even close.) One way to accomplish that will be to do a reverse stock split, which the company plans. But even with the stock above $1, it still must meet net tangible asset requirements, which it concedes may not be possible. Meanwhile, even if the tangible net worth requirements are met, SyQuest appears to be in one of those damned-if-you- do/damned-if-you-don't situations. As part of the reverse split, the company intends to issue new shares to satisfy previous warrant and stock commitments tied to so-called death-spiral financing. With such last-ditch forms of financing, an investor gives a company money in return for warrants to buy its stock. At the same time, the investor sells the company's stock short; it would be in that investor's best interest to sell any additional shares, received through warrants, to keep the stock price low. Without the reverse split and the ability to supply stock in return for warrants, the company would be out of cash. And even with the split, the company may need to do more financing that would in all likelihood dilute existing shareholders. Investors who prey on bankruptcies and restructurings are keeping a close eye on this one. Hey, maybe Iomega'll buy 'em. Speaking of which: Was its stock really worth another half billion or so in market value just because the company hired a new CEO who it took months to find? Bottom line is that nothing about the company's business or its fundamentals has changed. Short-sellers still think it's about $1 billion overvalued.