Overland Storage has signalled that it is business as usual, as the tape and backup vendor signed a new financing agreement that should give access to funds on a much quicker basis.
Overland said it has closed an 'accounts receivable financing transaction' with Marquette Commercial Finance. The agreement means that Marquette may finance up to $9 million (£6 million) of Overland's domestic accounts receivable, in order to provide it with 'accelerated liquidity.'
Agreements of this nature are a common financial practice for companies suffering from tight cash flows, and this agreement is designed to allow Overland to get an instant cash return from its invoices. The downside is that Marquette will take a percentage from Overland's invoices.
"The financing agreement with Marquette will enable Overland to monetise our receivables instantly instead of waiting for our normal collection period, which historically has been about 50 days," said Vern LoForti, president and CEO of Overland Storage in an email to Techworld.
The term of the agreement is two years, with annual renewals thereafter.
LoForti also took the opportunity to reassure Overland's customers, concerned over possible levels of support going forward.
"Yes, it has been business as usual for Overland as we have sustained all operations without any impact to the high levels of support we provide our customers," he said. "We have been very encouraged by the reciprocal support our channel partners and distributors have shown us as we continue to execute our recovery strategy."
It is fair to say that Overland has experienced a fair degree of financial pain of late. While its latest first quarter financial results only show a small drop in sales, there has been a significant rise in net losses to $6.9 million (£4.6 million), as well as a shrinking cash pile. This is despite the quarter being a period of expansion for the company after it integrated Adaptec's Snap Server NAS business that it acquired at the end of June.
To be fair though, Overland is working hard to reduce its costs. It announced in August it was axing 13 percent (or 53 staff) from its 350 employee headcount. It also announced that it was cutting its spending plan for fiscal year 2009 to achieve annualised savings of approximately $10 million.
"When we announced our Fiscal 2009 First Quarter results in October, we discussed recent restructuring and cost reductions, which have now taken effect," said LoForti. "As a result, we will see an operating expense reduction in the current quarter. We also will continue to monitor our performance closely and take whatever steps necessary to help the company execute its recovery strategy."
"In addition, we are continuing to leverage our recent Snap Server acquisition, and are pleased with the increased interest in Snap, particularly as an ideal solution for video surveillance applications," LoForti added.
"The combination of Snap Server NAS appliances, along with enhancements to our REO disk-based appliances and NEO tape libraries, further reinforces our end-to-end data protection strategy, which has been well received in the market."
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