Server and visualization technology vendor Silicon Graphics Inc has filed an amended plan of reorganization and disclosure statement, and said it hopes to exit Chapter 11 bankruptcy protection by the end of September.
Things came to a head for SGI as it filed for Chapter 11 in the US in early May. Since then it has been selling assets and restructuring its various real estate and other debt obligations.
The company has now reached a global settlement agreement with the Official Creditors’ Committee, an Ad Hoc Committee of Senior Secured Noteholders, and the largest holder of Silicon Graphics’ Unsecured Debentures.
Under the Plan, SGI will emerge a public company with a new credit facility and its total debt reduced from $345m to $70m. The company’s notes and debentures will be extinguished in exchange for the new common stock and cash, respectively, and rights to invest $50m in additional shares of the reorganized company.
Certain Senior Secured Noteholders will purchase any common stock that remains unpurchased in the rights offering. All of SGI’s new common stock will be owned by SGI’s current noteholders, debentureholders, and management, pursuant to a management incentive program. SGI’s current shareholders will receive no recovery under the plan, the company said.
We are pleased with the progress the company is making and the likelihood of an exit by the end of September, said Dennis McKenna, SGI chairman and CEO. With the financial re-engineering process nearing completion, the company is working in parallel on its operational initiatives to improve performance. We look forward to focusing 100% of our efforts on executing our new strategies.
The hearing to approve the Disclosure Statement is scheduled for July 27, and following its approval, SGI said it will begin soliciting creditors on its Plan of Reorganization.