The Board approved the decision to file for bankruptcy protection only after exhausting all alternatives to preserve shareholder value and to fulfill the company’s obligations to its creditors and employees, Cyril Yansouni, chairman of the Fremont, California-based company, said in a statement.
The filing was voluntary, the company said. Under voluntary Chapter 7 filings, companies typically sell their assets and go out of business. Last week, Read-Rite defaulted on an $11m line of credit secured by all the company’s US assets.
It has been a sad decline for Read-Rite, which was once the leader in magnetic head assemblies in disk drives. In June, it admitted that a lack of cash was affecting its ability to purchase materials and maintain operations at its Thailand operations, where it was trying to crank up production of its 80-gigabyte program. Its cash pile had declined 97%, falling to $4.2m as of March 30, from $126.7m at the end of 2001.
The company’s shares peaked at $240 in September 1995, but yesterday its shares traded at $0.57 on Nasdaq before trading was halted. In the past year, its shares have declined more than 94%.
In 1997, Read-Rite rejected a $1.23bn hostile bid by smaller rival Applied Magnetics Corp. Applied Magnetics filed for Chapter 11 bankruptcy protection in January 2000.
For the year ending September 30, 2002, Read-Rite reported a net loss of $234.6m, compared with net income of $35.9m, on revenues dramatically down to $262.8m, from $710.4m for fiscal year 2001.
Source: Computerwire
