Leaner, Fitter SGI To Exit Bankruptcy, Re-enter Fray
It is heartening to note that quite a few firms are trying to make a break for freedom from bankruptcy. Though bankruptcy is an option when you are down and out, it definitely isn’t good in the long-term interests of any company and the sooner you are out of bankruptcy, the better. Computer maker Silicon Graphics Inc or SGI as it is known today, was one of the market leaders for high-powered graphics systems, which conducted tasks such as visualizing 3D automobile models or underground oil reserves. However, not only did it lose its position, SGI was forced into bankruptcy due to many causes.
However, the company is firmly on the route to exiting bankruptcy. With this view in mind, SGI recently created a reorganization plan, which has been accepted by a bankruptcy judge recently. This will set the stage for the company to emerge from Chapter 11 bankruptcy protection in October.
This new plan envisages an entire relaunch of the company with new top management and an entirely new board of directors. The company aims to return to profitability in fiscal 2007. Another new feature will be the leaner, fitter look of the company. Before restructuring, SGI had an employee base of over 2000. Now, only 1,600 remain — this contributes to a cut of around $150 million in annual expenses. As the market expands, the company aims to grow from high-end systems with Intel Itanium processors to lower-end models using Intel’s Xeon.
For its restructuring plan, SGI has managed to obtain financing to exit bankruptcy. According to SGI officials, Morgan Stanley has provided the firm with a loan of $85 million, while General Electric Capital has given them a $30 million line of credit.