SGI gets $115M to fuel bankruptcy recovery
- By Doug Beizer
- Oct 02, 2006
After filing for bankruptcy protection in May, Silicon Graphics Inc. now has an approved reorganization plan and financing in place, according to company officials.
SGI's commitments for exit financing consist of an $85 million term loan from Morgan Stanley Senior Funding Inc., and a $30 million line of credit from General Electric Capital Corp.
The funds will be used to pay off debt obtained during Chapter 11, make distributions under the reorganization plan and provide working capital for the company's ongoing operations.
SGI of Mountain View, Calif., reached an agreement with all of its senior secured bank lenders ? the debt to be paid off first ? and with holders of a significant amount of its senior secured debt on terms of a reorganization plan that will reduce its debt by about $250 million.
At a September hearing, U.S. Bankruptcy Judge Burton Lifland for the Southern District of New York ruled that all the necessary requirements have been met for SGI to implement its reorganization plan. Every voting class of creditors voted overwhelmingly in favor of the plan, company officials said.
"This is a great day for SGI. We have accomplished so much in just five months, reaching our confirmation on the fast track that we expected," said Dennis McKenna, chairman and CEO. "We have eliminated the legacy debt, improved our liquidity and stabilized the business. We have also taken out significant costs ? $150 million on an annualized basis."
SGI's non-U.S. subsidiaries, including those in Europe, Canada, Mexico, South America and Asia Pacific, were not included in the filing.
Recent government business for SGI includes an Army Purchase SGI and VRSim Immersive Virtual Reality Welding Trainer Systems.
The Army Ordinance Center and School at the Aberdeen Proving Ground in Maryland bought six SGI and VRSim Virtual Reality Welding Trainers to teach soldiers and Marines for battlefield repairs, parts repairs and maintenance on armored and other vehicles.
The Virtual Reality Welding Trainer is based on SGI visualization hardware and VRSim simulation software. Designed and integrated by SGI Professional Services, the simulators are for novice and experienced welders alike. The six welding bays are linked to a central console for instructors to monitor trainee performance and store weld information for future analysis.
Doug Beizer is a staff writer for Washington Technology.