SGI files for Chapter 11, agress to $25m buy-out
updated 06:10 pm EDT, Wed April 1, 2009
SGI files for Chapter 11
Silicon Graphics Inc. (SGI), which is in bankruptcy protection, has agreed to sell its business to Rackable Systems Inc. for $25 million, unless it receives a higher bid from elsewhere. Rackable makes servers and data-center storage products and would take on certain liabilities and debts associated with SGI, the WSJ reported on Wednesday. The offering represents a 15 percent premium on SGI shares as of their closing on Tuesday.
SGI has said in the court papers that it has struggled with legacy issues from the first restructuring since it has last exited bankruptcy protection in October of 2006. Other names problems included increased competition and delays in the introduction of new technology.
SGI's Chapter 11 petition listed $390.5 million in assets and $526.5 million in debts, sums that include 14 of its subsidiaries. As of March 1st, SGI employed 1,200 workers.
The company is best known for its extremely high-performance visual rendering workstations and servers in the 1990s, but it struggled to compete in recent years as commodity hardware eventually claimed much of the same performance at lower prices. SGI eventually began selling customized systems based on AMD and Intel processors but never recovered its earlier position.
