Sphere 3D Corp. (NASDAQ:ANY) (“Sphere 3D”), a
containerization, virtualization, and data management solutions
provider, today announced that it has entered into a definitive
agreement to sell its Data Protection and Archive business (the
“DP&A Business”) to Silicon Valley Technology Partners LLC
(“Silicon Valley Technology Partners”), an entity established and
controlled by Eric Kelly, chairman and chief executive officer of
Sphere 3D, which intends to finance such purchase through raising
capital from a coalition of private entities. The board of
directors of Sphere 3D has unanimously (with Mr. Kelly recused from
the deliberations and voting) approved the transaction upon the
unanimous recommendation of a Special Committee of the board of
directors of Sphere 3D (consisting entirely of independent
directors, the “Special Committee).
“I believe the separation of the DP&A business from Sphere
3D is excellent news for all our respective stakeholders. I am
excited that the strategy we initiated last year is materializing
into positive outcomes for our investors, customers, employees and
suppliers,” said Mr. Kelly. “The Virtualization and DP&A
businesses will become more precise through dedicated tactics that
will continue to fortify the continuum of our efforts over the past
year and beyond.”
“We are pleased to have reached this agreement to sell the
DP&A business," said Peter Tassiopoulos, President of Sphere
3D. "The sale of this business is consistent with the results of
our strategic review and completing a transaction to render the
company debt free and allows us to better focus on our Converged
and Hyperconverged product offerings.”
Background
Sphere 3D first announced on March 13, 2017 that it was
assessing all opportunities and strategic alternatives that could
help increase shareholder value. Then on August 11, 2017, the
Sphere 3D board of directors established a special committee
comprising of its independent directors to consider its strategic
options. On October 2017, the company provided a further update, on
its progress and noted that it had completed an analysis of its
Data Protection & Archive portfolio (which includes RDX, tape,
media products and related services) as a pro-forma business unit
within the Overland-Tandberg storage business group, and that the
Company was continuing to review the overall business with an eye
towards unlocking potential value for shareholders.
Transaction Details
The closing of the transaction is subject to a number of
conditions, including approval of the transaction by Sphere 3D’s
shareholders and Silicon Valley Technology Partners’ completion of
its financing process. Until such financing is committed and
accepted by Sphere 3D, Sphere 3D is free to solicit and negotiate
other offers to purchase Sphere 3D, Overland Storage, Inc., or any
or all of their assets and has the right to terminate the
definitive agreement for any or no reason without penalty (subject
to an obligation to reimburse certain of the purchaser's
expenses).
At the closing of the transaction, Sphere 3D will receive $45
million, subject to a working capital adjustment. The proceeds from
the transaction will be used by Sphere 3D to pay off existing debt
obligations.
The transaction is expected to close in the first or second
calendar quarter of 2018, subject to the approval of Sphere 3D
shareholders.
In connection with the transaction, the Special Committee
retained Roth Capital Partners, LLC to, among other things, provide
an opinion s to the fairness of the transaction from a financial
point of view to Sphere 3D.
About Sphere 3D
Sphere 3D Corp. (NASDAQ:ANY) delivers containerization,
virtualization, and data management solutions via hybrid cloud,
cloud and on-premises implementations through its global reseller
network and professional services organization. Sphere 3D,
along with its wholly owned subsidiaries Overland Storage
and Tandberg Data, has a strong portfolio of brands, including
Overland-Tandberg, HVE ConneXions and UCX
ConneXions, dedicated to helping customers achieve their IT goals.
For more information, visit www.sphere3d.com. Follow us on
Twitter @Sphere3D, @HVEconneXions, @ovltb.
Additional Information
In connection with the proposed acquisition of the Data
Protection and Archive Business (the “Business”) by Silicon Valley
Technology Partners pursuant to the terms of a Stock Purchase
Agreement by and among Sphere 3D, Silicon Valley Technology
Partners and Overland Storage, Inc., Sphere 3D will file with the
Securities and Exchange Commission (the “SEC”) a proxy statement of
Sphere 3D on Schedule 14A, which proxy statement will be mailed or
otherwise disseminated to Sphere 3D’s shareholders when it becomes
available. Investors are urged to read the proxy statement
(including all amendments and supplements) as it will contain
important information. Investors may obtain free copies of the
proxy statement when it becomes available, as well as other filings
containing information about Sphere 3D, without charge, at the
SEC’s Internet site (http://www.sec.gov). Copies of these documents
may also be obtained for free from Sphere 3D’s web site at
www.sphere3d.com.
Participants in Solicitation
Sphere 3D, Silicon Valley Technology Partners and their
respective executives, officers and directors may be deemed to be
participants in the solicitation of proxies from the shareholders
of Sphere 3D in connection with the proposed transaction.
Information about Sphere 3D’s executive officers and directors is
set forth in its Annual Report on Form 20-F, which was filed with
the SEC on March 31, 2017, and the proxy statements for its 2017
annual meeting of shareholders, which was filed with the SEC on
November 13, 2017. Investors may obtain more detailed information
regarding the direct and indirect interests of Sphere 3D, Silicon
Valley Technology Partners and their respective executives,
officers and directors in the transaction by reading the
preliminary and definitive proxy statement regarding the
transaction, which will be filed with the SEC.
Safe Harbor Statement
This press release contains forward-looking statements, which
include, among others, Sphere 3D’s expectations, beliefs, plans,
objectives, prospects, financial condition, assumptions or future
events or performance, that may involve risks, uncertainties, and
assumptions concerning Silicon Valley Technology Partners’
acquisition of the Business from Sphere 3D, expected financial
performance of Sphere 3D, as well as Sphere 3D’s strategic and
operational plans. Sphere 3D intends such forward-looking
statements to be covered by the safe harbor provisions for
forward-looking statements contained in Section 21E of the
Securities Exchange Act of 1934 and the Private Securities Reform
Act of 1995. In some cases, forward-looking statements can be
identified by the following words: “may,” “will,” “could,” “would,”
“should,” “expect,” “intend,” “plan,” “anticipate,” “believe,”
“estimate,” “predict,” “project,” “potential,” “continue,”
“ongoing,” “outlook,” “guidance” and similar expressions, although
not all forward-looking statements contain these words.
Actual events, results and the timing of events could differ
materially from those anticipated or described in this written
communication due to a number of risks and uncertainties. The
forward-looking information and statements are or may be based on a
series of projections and estimates and involve risks and
uncertainties. The potential risks and uncertainties include,
without limitation, the possibility that Sphere 3D may be unable to
obtain required shareholder approval or that other conditions to
closing the transaction may not be satisfied, such that the
transaction will not close or that the closing may be delayed; the
occurrence of any event, change or other circumstance that could
give rise to the termination of the definitive transaction
agreement; the reaction of customers to the transaction; those
related to disruption of management’s attention from Sphere 3D’s
ongoing business operations due to the proposed transaction; the
effect of the announcement of the transaction on the ability of
Sphere 3D to retain and hire key personnel and maintain
relationships with its customers, suppliers and others with whom it
does business; general economic conditions; unexpected costs,
liabilities or delays; risks that the transaction disrupts current
plans and operations of the parties to the transaction; the ability
to recognize the benefits of the transaction; the amount of the
costs, fees, expenses and charges related to the transaction and
the actual terms of any financings that will be obtained for the
transaction; the outcome of any legal proceedings related to the
transaction; the occurrence of any event, change or other
circumstances that could give rise to the termination of the
transaction agreement; our inability to obtain additional debt or
equity financing or to refinance our debt; any increase in our cash
needs; Sphere 3D’s ability to maintain listing with the NASDAQ
Capital Market; and other risks detailed from time to time in our
periodic reports contained in our Annual Information Form and other
filings with Canadian securities regulators (www.sedar.com) and in
periodic reports filed with the United States Securities and
Exchange Commission (www.sec.gov). All forward-looking
statements speak only as of the date of this written communication
or, in the case of any document incorporated by reference, the date
of that document. Sphere 3D undertakes no obligation to update any
forward-looking statement, whether written or oral, that may be
made from time to time, whether as a result of new information,
future developments or otherwise, except as required by law.
Investor Contact:The Blueshirt
GroupLauren SloaneTel: +1 415-217-2632Lauren@blueshirtgroup.com
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