StorageNetworks to shut down
Published: 01 Aug 2003 11:10 BST
Roughly three years after an initial public offering saw its stock triple in price, StorageNetworks said on Thursday that it plans to liquidate the company.
The ailing maker of storage management software also said in a statement that it had let go of all remaining employees "with the exception of a small transition team that will oversee the wind down of the business," and that chief executive Paul Flanagan is stepping down from his post.
A StorageNetworks representative could not be reached immediately for comment on the number of employees affected. In January, the company said it would cut its staff in half, to 110 workers.
StorageNetworks said its board of directors had considered a range of options, including selling the company, before settling on a plan of liquidation. Liquidation involves shuttering a business and converting company assets to cash. The company then pays creditors and distributes the remaining proceeds to shareholders. StorageNetworks said it expects it will be able to give its stockholders about $1.60 (£1) to $1.70 per share in the liquidation.
The company previously had said it would exit its managed service business, and that it had hired investment banking companies "to identify and assess all available alternatives to maximise shareholder value."
But the company could not find a suitable suitor, Flanagan said in the statement on Thursday. "Interest in acquiring the company was limited, and the only interest that was expressed was at price points below what we estimated as our liquidation value," he said.
The company said Flanagan, who replaced co-founder Peter Bell as chief executive in January, would leave the company immediately to pursue other opportunities. Dean Breda, StorageNetworks' general counsel, will take over the day-to-day responsibilities of president and chief executive during the liquidation period. Flanagan plans to remain on the board of directors during the liquidation.
The company said it will file a proxy statement seeking shareholder approval of the liquidation plan.
In late trading on Thursday, shares of StorageNetworks rose 20 cents, or 15.63 percent, to $1.48.
StorageNetworks stock went public on June 30, 2000, when it climbed 234 percent to close at $90.25.
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