After weeks of uncertainty, the Tintri bankruptcy saga has been resolved.
DataDirect Networks (DDN) said it will pay nearly $60 million for Tintri and plans to reveal the product roadmap by December. According to a published report, DDN’s bid topped an offer from Austin, Texas, hedge fund ESW Capital. U.S. District Bankruptcy Court Judge Kevin Carey reportedly approved the terms of DDN’s asset purchase following an auction that spanned six rounds of bidding over two days.
DDN said its immediate plan is to restart service and support for existing Tintri customers as soon as this week. DDN and Tintri signed a letter of intent in July.
Considering Tintri’s financial woes, industry observers wondered if Tintri could be had for pennies on the dollar. Legal news website Law360, citing court documents, said DDN’s final offer of $53.8 million was nearly $14 million higher than its stalking horse bid of $40 million. According to Law360, Santa Clara, Calif.-based DDN reportedly will provide $35 million in cash and $15 million in guaranteed royalty payments to be spread over a three-year period, followed by nonguaranteed royalties in the ensuing years.
DDN subsequently disclosed its acquisition price at $60 million. DDN officials must have had an inkling a favorable decision was forthcoming. The vendor is attending VMworld this week, a trade show where it has never had much of a presence. Company representatives at Tintri’s trade booth cracked open champagne to celebrate the news.
Tintri had already bought a booth at VMworld before it went belly up. The signage on that booth read, “Tintri by DDN.” As late as Tuesday, however, reports circulated that a private equity fund was making a last-minute play for Tintri and the judge pushed back his decision one day.
Aside from the Tintri virtualization technology, DDN will inherit Tintri’s 1,500 customers, which include 21 Fortune 1000 firms. The customer list includes AMD, Avaya, Chevron, Comcast, NASA, SONY and Toyota.
“This is a great opportunity for us to expand into the enterprise space,” DDN president Paul Bloch said. He said Tintri’s “fantastic file system” provides a counterpoint to DDN’s Gluster parallel file system-based flagship storage for high-performance computing.
Bloch said DDN plans to boost Tintri headcount to about 200 employees within the next year. “We plan for Tintri to be in the black within a year,” Bloch said.
DDN said it plans “substantial investments” in Tintri’s roadmap in areas that include analytics, databases, NMVe flash and server virtualization.
DDN said Tintri will operate as a separate engineering, sales and support division. As the Tintri bankruptcy process unfolded, the vendor’s customers expressed fears it would interrupt maintenance and support. DDN said it would honor those existing agreements.
According to Tintri bankruptcy filings, the Mountain View, Calif., vendor owes about $8.8 million to creditors and has a cash balance of about $200,000. Tintri laid off about 75% of its workforce to cut costs, although that alone was not sufficient to outrun mounting losses.
The Tintri bankruptcy capped a stunning fall for the once-promising company, which carved a niche in the all-flash market by selling virtualization arrays to VMware shops. The company completed an ill-fated initial public offering in June 2017, an undertaking it took when private funding dried up.
Tintri filed to raise $109 million, but its IPO was postponed due to lackluster interest. When it popped, shares opened at $7, well off the $11 target. By June, Tintri shares dropped to penny-stock status.
CEO Thomas Barton resigned in June, less than two weeks after Tintri sought Chapter 11 protection. Barton took the reins in April, but stepped down when he could not cobble together a funding deal.
Tintri claims to have between 1,000 and 5,000 creditors. FlexTronics International, Tintri’s chief manufacturing partner, ceased shipping products this year, citing unpaid bills. According to court documents, FlexTronics is owed $4.48 million, which accounts for about half of Tintri’s outstanding debt.
(Dave Raffo contributed to this story)