Feeds

Foundering OCZ snatches megabuck lifeline in white-knuckled grip

Can the money tugboat tow this leaky ship off the reef?

Beginner's guide to SSL certificates

OCZ, drowning in a sea of cancelled products, its banker missing overboard, revenues leaking from its deflating financial rubber ring and burdened by an inability to understand its own condition has been hurled a last minute $30 million cash and credit lifeline.

The SSD startup company almost submerged under previous CEO and founder Ryan Petersen, weighed down by proliferating products and customer incentive programs of such opacity that OCZ has been unable to file its last two quarters' results statements (10-Q forms) with the SEC - and risks ejection from the Nasdaq stock market unless it does so by April 8th.

Incoming replacement CEO Ralph Schmitt struggled with further problems, including the sudden leap over the gunwale of OCZ's banker, Wells Fargo, which took to the lifeboats. But now a loan agreement with Hercules Technology Growth Capital means that the Wells Fargo relationship has been terminated.

Schmitt said:

"Obtaining this new credit facility is the first step in providing OCZ with a complete capital structure going forward. This capital will be used to strengthen the business, fund future growth, and support emerging enterprise opportunities."

It's still days of desperation for OCZ but the company now has financial breathing room and might just come through. Without Hercules' help, the firm may well have foundered altogether.

lifebelt

The new facility has similarities to a late-stage VC investment round, with Hercules getting a piece of the company. The deal involves a $15 million term loan and another $15 million in a revolving loan facility. OCZ said the first $10 million of the term loan was drawn at closing with repayments due in thirty monthly instalments beginning in November 2013. The remaining $5 million of the term loan is contingent upon the company being current in its SEC filings and achieving certain revenue levels for two consecutive quarters.

Hercules has a warrant to purchase 688,073 shares of OCZ Technology common stock at an exercise price of $2.18 per share. The current stock price is $2.10, which shows some faith in OCZ by Hercules.

OCZ

The revolving credit facility is split too; there is a $10 million revolver to be repaid in full by April 2016 and an extra $5 mill becomes available if OCZ attains certain unspecified financial measures.

Schmitt said OCZ's product line and market focus restructuring is coming along:

"I am pleased with the operational improvements our team is making as we continue building a profitable OCZ which is focused on designing innovative, best-in-class Solid State Storage solutions for our valued customers."

OCZ has hope for the future. Without the Hercules lifeline, hope would have been in short supply. Now the weary and battered OCZ sales reps, marketeers, engineers, support staff and everyone else have a reason to redouble their efforts to save their company. ®

Choosing a cloud hosting partner with confidence

More from The Register

next story
Azure TITSUP caused by INFINITE LOOP
Fat fingered geo-block kept Aussies in the dark
NASA launches new climate model at SC14
75 days of supercomputing later ...
Yahoo! blames! MONSTER! email! OUTAGE! on! CUT! CABLE! bungle!
Weekend woe for BT as telco struggles to restore service
You think the CLOUD's insecure? It's BETTER than UK.GOV's DATA CENTRES
We don't even know where some of them ARE – Maude
DEATH by COMMENTS: WordPress XSS vuln is BIGGEST for YEARS
Trio of XSS turns attackers into admins
Cloud unicorns are extinct so DiData cloud mess was YOUR fault
Applications need to be built to handle TITSUP incidents
BOFH: WHERE did this 'fax-enabled' printer UPGRADE come from?
Don't worry about that cable, it's part of the config
Astro-boffins start opening universe simulation data
Got a supercomputer? Want to simulate a universe? Here you go
prev story

Whitepapers

Why cloud backup?
Combining the latest advancements in disk-based backup with secure, integrated, cloud technologies offer organizations fast and assured recovery of their critical enterprise data.
A strategic approach to identity relationship management
ForgeRock commissioned Forrester to evaluate companies’ IAM practices and requirements when it comes to customer-facing scenarios versus employee-facing ones.
5 critical considerations for enterprise cloud backup
Key considerations when evaluating cloud backup solutions to ensure adequate protection security and availability of enterprise data.
Reg Reader Research: SaaS based Email and Office Productivity Tools
Read this Reg reader report which provides advice and guidance for SMBs towards the use of SaaS based email and Office productivity tools.
Getting ahead of the compliance curve
Learn about new services that make it easy to discover and manage certificates across the enterprise and how to get ahead of the compliance curve.