Silicon Graphics Goes Chapter 11

By Mel Duvall  |  Posted 05-09-2006

Silicon Graphics (SGI), the company whose high-end workstations have powered everything from oil and gas reservoir simulators to the computer wizardry behind the Lord of the Rings film series, filed for Chapter 11 bankruptcy protection Monday.

SGI said it has reached a voluntary agreement with its debt holders to trade their debt for equity stakes in the Mountain View, Calif., company. Under the arrangement, bondholders, who are owed about $191 million, will receive a 25% stake in the company.

Monday's announcement was the latest in a long series of moves aimed to save the company, which is facing fierce competition from cheaper and increasingly more powerful personal computers.

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