Fallen Star SGI To Sell Most Assets For $25M

MICHAEL LIEDTKE

SAN FRANCISCO (AP) — Silicon Graphics Inc. will sell the remaining shreds of its fraying franchise to Rackable Systems Inc. for $25 million, punctuating the downfall of a former high-tech star that once dazzled investors and customers with the prowess of its fancy computers.

The proposed dismantling was announced after Silicon Graphics — also known as SGI — filed for Chapter 11 bankruptcy protection for the second time in less than three years. The deal with Rackable Systems, covering most of Silicon Graphics' assets, is supposed to be completed within the next two months.

The acquisition won't include $562 million in debt that Silicon Graphics listed in a bankruptcy petition filed in New York federal court. The Sunnyvale-based company valued its assets at $390 million.

Silicon Graphics shares plunged 23 cents, or 56 percent, to close Wednesday at 18 cents while Rackable Systems shares shed 18 cents, or 4.4 percent, to finish at $3.88.

In bankruptcy court documents, Silicon Graphics said it had been scrambling to find a buyer for months, but couldn't locate a mate even after contacting about 150 potential suitors.