The company filed a voluntary petition in U.S. Bankruptcy Court in San Francisco and is negotiating for its assets to be acquired by Sumitomo Precision Products of Hyogo, Japan, according to Chief Financial Officer Patrick O’Connor.
Aviza has 300 employees around the world, 60 of them at the Scotts Valley headquarters.
The company said it has signed a nonbinding letter of intent to sell “certain of its assets and businesses” to Sumitomo, a diversified equipment manufacturer that makes one semiconductor manufacturing system that competes with an Aviza system.
O’Connor said it hasn’t been decided which of the assets will be sold, but he doesn’t anticipate that all current employees would be retained after the acquisition.
The company has 10 offices in Europe and Asia, a manufacturing plant in Wales and the headquarters, where manufacturing activity has been winding down for a year, O’Connor said.
Although 2,500 Aviza-manufactured systems are in operation worldwide, the firm has been squeezed by the current recession, the near-collapse of one its major markets and trouble paying its debt. In January, it retained Needham & Co. to review its “strategic options,” which it said included a merger, a sale of its assets and liquidation.
Additionally, a falling stock price led to a warning that the company could be delisted by the Nasdaq stock exchange, and in May it failed to file a required quarterly financial report with the U.S. Securities and Exchange Commission.
“We have been working hard to find a buyer that
would best leverage our products and provide ongoing support to our customers,” CEO Jerry Cutini said in a statement.
“Through this voluntary bankruptcy process, we can continue to operate our business and pursue an orderly transition to (Sumitomo) with minimal impact on our customers and employees.”
The news disappointed Josh Breeden, president of the Scotts Valley Chamber of Commerce.
“I can’t say it’s surprising, but it’s very disappointing,” Breeden said. “We are never happy to see a business close, given the impact on employees who have lost or will lose jobs.”
The company’s 43-acre property is on the market. Breeden said “a research park-type of tech/biotech incubator would make sense, especially given the hope of a Town Center very nearby.”
A Chapter 11 proceeding can make a company more attractive as a takeover target by reducing its debt, but carries the risk that a judge will limit management’s flexibility.
Aviza took over the former Watkins-Johnson plant on Kings Village Road following its formation by a venture-capital firm in 2003. It went public when it acquired Trikon Technologies Inc. in 2005. Trikon and Aviza Inc., the original privately held company, still exist on paper.
More recently, Aviza underwent a round of layoffs, pay cuts and furloughs to reduce expenses. The company also was unsuccessful in two attempts to sell its property and move to quarters in Silicon Valley.
The Chapter 11 filing was made necessary by “continuing declines in orders ... and related cash collections, the recent acceleration of the company’s borrowings” and an inability to find new funding sources, the company’s statement said.
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