Toshiba could buy OCZ as part of bankruptcy proceedings

OCZ has filed for bankruptcy to become the latest casualty in the solid state drive [SSD] sector as Toshiba waits in the wings to takeover the assets.

The firm was forced into bankruptcy this week after Hercules Technology Growth Capital [HTGC] called in an investment loan and in the process seized the firm’s bank accounts.

HTGC could do this as the terms of the loan stated that in the event of a default the provider of the loan could seize assets including, if needed, bank accounts. This being the case Toshiba has agreed to step in and purchase the assets with OCZ telling Reuters it has “substantially completed” negotiations with Toshiba on an asset purchase agreement.

"The agreement is subject to various conditions: the preservation of the value of the business, including the retention of employees, the negotiation and execution of definitive documentation, the filing of bankruptcy petitions by the Company and certain of its subsidiaries,” stated an announcement from OCZ on its website.

If the deal with Toshiba doesn’t go through, OCZ admitted that it will immediately file for bankruptcy and liquidate all assets and it follows the company battling a shortage of NAND flash memory chips for the past year. The firm has also not posted an annual profit in five years and saw its shares plummet by 69 per cent on Tuesday and then a further 80 per cent on Wednesday.

Analysts aren’t surprised the company is looking to sell assets after it had retained Deutsche Bank’s services in August to help it evaluate strategic options.

"The filing is not surprising. We had estimated that OCZ had cash for a quarter or so and didn't see any natural buyers," Longbow Research analyst Joseph Wittine told Reuters in an email. "We assumed in any asset sale or capital infusion ... shareholders would be substantially diluted at best and, very possibly, left with nothing."

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