updated 11:30 pm EST, Mon December 2, 2013
Deal conditional on regulatory approvals, bankruptcy court rulings
Financially troubled SSD manufacturer OCZ Technology Group today announced that the company has signed an asset purchase agreement with Toshiba Corporation to acquire substantially all of OCZ's assets in a Chapter 11 bankruptcy proceeding for $35 million, subject to customary regulatory approval. The move comes only a few days after OCZ revealed that bankruptcy was imminent and its assets had been seized by debtors. The offer has already been approved by both Toshiba's and OCZ's board of directors.
"Over the past year, OCZ has dealt with numerous issues which have stressed the company's capital structure and operating model, posing a challenge to achieving near-term profitability," said Ralph Schmitt, CEO of OCZ in a statement. "The combination of NAND flash supply constraints and credit issues have impacted our ability to satisfy the demands of our customers; this combined with increased pricing pressure in our industry have contributed to our on-going operating losses. On an operational basis, we completed a complex investigation, several restructurings and a multi-year restatement that added significantly to our working capital requirements. We have been working diligently on this partnership with Toshiba and we believe that this is the best outcome under our current corporate conditions."
Under the agreement, Toshiba will acquire OCZ's client and enterprise solid state drive business. OCZ will continue to operate and serve existing and future customers during this process. 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 recently bankruptcy case.
"We are excited to participate in this opportunity. If our bid is successful, the combination of our leading NAND technology with OCZ's SSD expertise will allow us to further strengthen Toshiba's SSD business," said Seiichi Mori, vice president of Toshiba. "We value OCZ's SSD business and technology in both the consumer and enterprise markets, and we are confident that it will reinforce our capabilities and help us to secure leadership in the SSD market."