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Tandberg Data taps out but doesn't go liquid

The bright side of bankruptcy

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Tandberg Data ASA has filed for bankruptcy in Norway after it was unable to repay a loan from Cyrus Capital, and will use the process to restructure and reduce its debt burden.

Tandberg Data ASA is a holding company which owns Tandberg Storage, responsible for tape drive design, manufacturing and OEM sales to the low- and mid-range markets, and various foreign operating companies in France, Germany, Japan, Singapore (Tandberg Asia), the UK and USA. There are also branch offices in Brazil, China (PRC) and Italy.

The Tandberg Data group is historically a supplier of tape-based data protection devices and partook in tape supplier consolidation with the purchase of Exabyte in November 2006. It has latterly moved into supplying disk-based data protection products, notably the RDX removable disk cartridge line, which it manufactures under licence and supplies to OEMs such as HP and IBM.

In early 2008 Tandberg Data went through a financial crisis after terrible fourth quarter 2007 results, with a CEO change - Pat Clarke replaced Kristian Jacobsen who had started as CEO a mere ten months earlier - and a debt for equity swap refinancing exercise. A substantial reason for this crisis was the decline in tape sales and a towering cost structure.

Clarke and a new executive team set about restructuring the firm's operations and continuing to develop its products, while the board and Clarke tried to secure its future financing, which started well with a successful rights issue.

At that time there were three investors mentioned; Cyrus Capital, Nerland Investment and Norsk Tillitsmann, which all wanted their money secured. Since then the recession has happened and Tandberg was once again at the edge of the financial abyss. This time it has stepped off the cliff.

Cyrus Capital needed a lapsed loan repaid, but there was no money in Tandberg Data's till to do this. A second rights issue was considered by the board but has zero chance of success in the present economic climate. The board has consequently filed for bankruptcy.

So Cyrus now effectively owns Tandberg Data, effectively a debt for company swap. It is the major owner of a new holding company, TAD Holdings AS, operationally headquarted in Dortmund, Germany, which owns all the Tandberg Data subsidiaries. These subsidiaries continue their day-to-day operations.

The odd - and good - thing is that not much changes for them and their customers. The Norwegian bankruptcy process will allow Tandberg Data to deal with its cost and debt burden, to restructure its operations and to continue the strategy of broadening its focus from being a tape company to one that provides tape, disk, software and services data protection offerings.

Pat Clarke said: “The operations of the Tandberg Data subsidiaries will continue to operate in this new structure, with a much reduced debt burden. The difficult steps we are taking now will enable us to build a company that can be successful in providing data protection solutions and support to our valued customers, suppliers, and business partners for a long time to come.

"It is my hope and wish that the operating subsidiaries of the Tandberg Data group can continue to operate in this new setting, and I encourage our world-wide partners and customers to continue business as usual with the operating subsidiaries." ®

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