Bankrupt OCZ Sells Assets to Toshiba for $35 Million

Paul Lilly

Toshiba scores big with a relatively low investment

Investors weren't beating down OCZ's doors to hand the company money, or even a floatation device. Out of options, out of time, and out of cash, OCZ could do nothing but negotiate with the only company showing interest in its assets. That company is Toshiba, which hammered out a deal with OCZ to acquire all of the drive maker's assets in a chapter 11 bankruptcy proceeding for $35 million.

This is a steal for Toshiba, which will also provide OCZ with financing so that it can continue to operate and support its customers during the sale period. OCZ's board of directors already approved the sale, and barring an objection from the bankruptcy court, the sale is expected to close in 60 days.

"Over the past year, OCZ has dealt with numerous issues which have stressed the company's capital structure and operating model, posing a challenge to achieving near term profitability. The combination of NAND flash supply constraints and credit issues have impacted our ability to satisfy the demands of our customers; this combined with increased pricing pressure in our industry have contributed to our on-going operating losses. On an operational basis, we completed a complex investigation, several restructurings and a multi-year restatement that added significantly to our working capital requirements," stated Ralph Schmitt, CEO of OCZ. "We have been working diligently on this partnership with Toshiba and we believe that this is the best outcome under our current corporate conditions."

Perhaps the biggest gain for Toshiba is Indilinx. OCZ paid $32 million in common stock for the SSD controller maker two years ago and has been using that acquisition to pump out controllers for its own products as well as competitors' SSDs. Meanwhile, Toshiba already operates a strong NAND flash memory business.

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