By Soham Chatterjee
Nov 27 Solid-state hard drive maker OCZ
Technology Group Inc said it had received an offer from
Toshiba Corp to buy the company in a planned bankruptcy
OCZ shares tumbled as much as 80 percent on Wednesday after
trading of the stock resumed on the Nasdaq. The stock had fallen
69 percent so far this year through Tuesday's close.
OCZ, which has a market capitalization of $43 million, said
it had "substantially completed" negotiations with Toshiba on an
asset purchase agreement.
The company said it expected to file a petition for
bankruptcy shortly after completing final documentation with
Toshiba and Hercules Technology Growth Capital Inc, one of its
OCZ, which has not posted an annual profit in five years,
said if it failed to agree on a deal with Toshiba it would
immediately file for bankruptcy and liquidate.
The company has been battling a shortage of NAND flash
memory chips, used in solid state drives, for about a year.
Supply of NAND memory chips - used for general storage and
data transfer in memory cards and solid-state drives (SSDs) -
has failed to keep pace with a boom in demand from mobile device
"The filing is not surprising. We had estimated that OCZ had
cash for a quarter or so and didn't see any natural buyers,"
said Longbow Research analyst Joseph Wittine in an email to
"(We) assumed in any asset sale or capital infusion ...
shareholders would be substantially diluted at best and, very
possibly, left with nothing."
The company said in August it had retained Deutsche Bank AG
to help it evaluate strategic options. OCZ had also said it
would amend its loan and security agreement with Hercules as the
company did not meet certain covenants.
OCZ said on Wednesday it had received notices that Hercules
had taken control of its depository accounts at Silicon Valley
Bank and Wells Fargo Bank, National Association.
OCZ has long been considered to be a takeover target for
hard drive makers such as Seagate Technology Plc and
Western Digital Corp and flash memory maker Micron
Technology Inc, who have been battling for a piece of the
fast-growing market for solid-state drives used in servers.
Toshiba, Japan's largest chipmaker, had said earlier this
year it was considering investing $200-300 million on new
equipment to manufacture NAND flash memory chips.
Western Digital bought troubled SSD maker Stec Inc
for $340 million in June to become one of the top players in the
flash drive market.
OCZ was also hit by an investigation by U.S. regulators into
its accounting practices last year.
Shares of San Jose, California-based OCZ were down 73
percent at $0.17 in late afternoon trade.