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May 16, 1988

SALE OF BANKRUPT THIN FILM MEDIA MAKER DATA MAGNETICS AS GOING CONCERN LIKELY

By CBR Staff Writer

The bland announcement that Data Magnetics Ltd, the Shotton, Clwyd manufacturer of film disk media had gone into receivership recently hides the fact that manufactuers appear to be queuing to take what’s left into their fold. It won’t be lost on companies like IBM and Siemens that thin film semiconductor disk capacity in Europe is like gold dust, and there is at least one UK-based independent that will be near the front of the queue to the receiver’s door. Rodime Plc, Glenrothes, was an early investor in the company, taking 10% of the initially issued shares, a stake that has since been diluted a little because Rodime did not participate in the scheduled second round of financing. The current crisis was, it seems, precipitated by the backers balking at putting up a third round of financing, and suggests that yields of media at the Welsh plant are not high enough, or that the business is not viable. However the receiver – from Cork Gully – has negotiated funds to keep the company going, and is believed to have forward orders from blue chip customers of around UKP4m, which suggests that yields are acceptable and the process workable. It is understood that Rodime has been taking about half the output of magnetic media and accounting for about 40% of the revenue, which raises questions about why the Scottish Winchester manufacturer allowed the company to go into receivership: no-one was available for comment at Rodime yesterday. At all events, whether with Rodime’s participation or not, the future of the sole independent European supplier of thin film media technology – founded by Control Data alumnis – is likely to be resolved over the coming five to six weeks, and the price may depend on the receiver realising just what a hot little property he might have on his hands. In the words of one observer, an interested major can pick up UKP20m of production facility for about UKP2m. But it depends whether the majors can move quite that fast. And even IBM may well care to take a close look: it currently combined its own thin film heads with conventional magnetic oxide platters, but must have considered a move to thin film media for some of its drives, and find Data Magnetics’ technology worth a glance.

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