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.
Zintel Public Relations
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SOURCE Crossroads Systems