05.15.2006 10:38 AM
SGI files for bankruptcy
Silicon Graphics (SGI), a computerized visual effects company, has filed for bankruptcy protection.
The company announced an agreement that will give noteholders a majority stake in the company and will cut $250 million in the company's debt.
The bankruptcy filing comes two months after SGI said it would reduce its global work force by about 250 jobs, or 12 percent, by the end of the year in a move to cut $150 million in annual costs, Bloomberg News reported.
Within 30 days, SGI will file a strategy plan to exit bankruptcy, reduce debt by $250 million and repay creditors.
“SGI made a series of investments in technology that yielded less than the expected results,” Kathy A. Lanterman, the chief financial officer, said in the court filing. “SGI's customers significantly reduced their capital expenditures which, in turn, negatively impacted revenue.”
The company said it would continue to do business and support its customers. Based in Mountain View, CA, SGI listed $397 million in assets and $650 million in debt in papers filed with the bankruptcy court. The filing said a group of noteholders has agreed to lend the company $70 million. The company's current shares will be canceled and equity holders will receive nothing under the proposed plan. The plan requires court approval.
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