AUSTIN, Texas, Aug. 14, 2017 /PRNewswire/ -- Crossroads
Systems, Inc., (NASDAQ: CRDS) today announced that it has filed a
case under Chapter 11 of the Bankruptcy Code and a prepackaged
Chapter 11 plan of reorganization ("Plan") that has been accepted
by the holders of more than 2/3 of the Preferred Shares of
CRDS. In connection with the filing, the company entered into
restructuring support agreements with 210/CRDS Investment
LLC ("210") and with certain holders of the Company's Series F
Preferred Stock.
Subject to the terms and conditions of the Plan and the
restructuring support agreement with 210 ("210
RSA"), Dallas-based 210 will invest $4 million cash
in Crossroads Systems in exchange for shares of the reorganized
company's common stock representing approximately 49.49% of the
common stock of the reorganized company. In addition, 210
will provide up to $10 million of financing for the company to
use (subject to the terms and conditions of the Plan and the 210
RSA) to implement its strategy of monetizing its intellectual
property assets and pursuing investments in companies that generate
profit and positive cash flows, thus creating long-term shareholder
value.
The Plan provides for the payment of all creditor claims in
full, for holders of Preferred Shares to receive their pro rata
share of $2,672,233.78 in cash plus
8% of the common stock of the reorganized company, and for holders
of common stock to exchange their existing shares of common stock
for an equivalent number of new shares of the common stock of the
reorganized company, which shares would constitute approximately
42.51% of the outstanding share of the common stock of the
reorganized company.
Richard K. Coleman, Jr.,
Executive Director at Crossroads Systems said, "We are pleased
210/Crossroads Investment LLC has chosen to make an investment in
Crossroads Systems, Inc. The investment capital will allow
Crossroads to continue to monetize its patent portfolio while
pursuing potential acquisitions that can create value for
investors."
Robert Alpert, a management
representative of 210, commented: "We are excited about the
opportunity to invest in Crossroads Systems, Inc. and look forward
to working with management to implement the company's business
strategy and create long-term shareholder value."
The consummation of the Plan will be subject to customary
conditions and other requirements. The 210 RSA also provides for
termination by each party, or by any party, upon the occurrence of
certain specified events.
The foregoing descriptions of the 210 RSA and the Plan are
qualified by reference to the full text of such documents, copies
of which are available on the company's website:
www.crossroads.com.
The company filed its voluntary Chapter 11 petition and the Plan
in the U.S. Bankruptcy Court for the Western District of
Texas in San Antonio.
The information contained in this press release is for
informational purposes only and does not constitute an offer to
buy, nor a solicitation of an offer to sell, any securities of the
company, nor does it constitute a solicitation of consent from any
persons with respect to the transactions contemplated hereby and
thereby. While the company expects the restructuring will take
place in accordance with the Plan, there can be no assurance that
the company will be successful in completing a
restructuring.
Certain statements in this press release are forward-looking and
are based upon the company's current belief as to the outcome and
timing of future events. All statements, other than statements of
historical facts, that address activities that the company plans,
expects, believes, projects, estimates or anticipates will, should
or may occur in the future are forward-looking statements.
Important factors that could cause actual results to differ
materially from those in the forward-looking statements herein
include, but are not limited to, the ability to confirm and
consummate a plan of reorganization in accordance with the terms of
the Plan; the ability to complete the financing transactions
contemplated by the 210 RSA; risks attendant to the bankruptcy
process, including the effects thereof on the company's business
and on the interests of various constituents, the length of time
that the company might be required to operate in bankruptcy and the
continued availability of operating capital during the pendency of
such proceedings; risks associated with third party motions in any
bankruptcy case, which may interfere with the ability to confirm
and consummate a plan of reorganization in accordance with the
terms of the Plan; potential adverse effects on the company's
liquidity or results of operations; increased costs to execute the
reorganization in accordance with the terms of the Plan; effects on
the market price of the company's common stock and on the company's
ability to access the capital markets; and known trends and
uncertainties as described in the company's Annual Report on Form
10-K for the year ended December 31, 2016, as filed with
the Securities and Exchange Commission. Should one or more of
these risks or uncertainties occur, or should underlying
assumptions prove incorrect, the company's actual results and plans
could differ materially from those expressed in the forward-looking
statements.
Investor Contact:
Mark
Hood
Crossroads Systems
ir@crossroads.com
Press Contact:
Matthew
Zintel
Zintel Public Relations
matthew.zintel@zintelpr.com
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SOURCE Crossroads Systems