A frantic bid is underway to rescue former disk drive manufacturer Micropolis Corp, now called StreamLogic Corp. The Chatsworth, California-based company is trying to halt its slide into insolvency with a series of last ditch efforts (CI No 3,185), but the problems just keep piling up. The company sold off its loss-making disk drive division (along with the Micropolis name) to Singapore Technologies Pte some 18 months ago. In return, the newly christened StreamLogic Corp received cash of around $47m and the company was repositioned as a disk subsystem integrator. Investor confidence returned briefly and the stock climbed to $8. But the losses continued and in the quarter to September 1996 the company did a deal with its debenture holders to try and reduce its corporate debt. By March this year there was a complete change at a senior board level prompted by continuing poor results and steady decline in stock value. And now the company has gone badly off the rails with a bizarre set of announcements which left investors feeling angry and confused. On Wednesday the company announced that the fourth quarter had been a disaster with losses of $20m and the current quarter was heading in the same direction. The announcement went on to explain that StreamLogic had failed to pay the interest on its debentures, due on the preceding Monday, and was therefore considering seeking protection from its creditors by declaring bankruptcy. Use of the B word crippled the stock which fell to $.03 per share. The very next day StreamLogic announced it had made a miscalculation. The interest it had failed to pay wasn’t in fact due for another three months, granting the company some breathing space. StreamLogic insists it made a genuine mistake but the idea that a company doesn’t know when its interest is due is hard to swallow. The reprieve is only temporary however, and the future of the company lies in negotiations with its trade creditors who may or may not play ball in allowing the directors to battle on. In the meantime, it is likely that the stock will be de-listed from NASDAQ, making it even harder for the company to raise finance. And in case you were in the market for some of StreamLogic’s debentures but were currently undecided, Moody’s have helpfully downgraded StreamLogic’s debt rating to a C.
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