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CUSIP No. 690310206
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13D
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EXPLANATORY NOTE: This constitutes Amendment No. 1 (Amendment No. 1) to the
Schedule 13D relating to the shares of Common Stock of Overland Storage, Inc. (the Issuer) filed with the SEC on February 22, 2013 (as so amended, the Schedule 13D) by Cyrus Capital Partners, L.P., a Delaware
limited partnership (Cyrus), Crescent 1, L.P., a Delaware limited partnership (Crescent), CRS Master Fund, L.P., a Cayman Islands exempted limited partnership (CRS), Cyrus Opportunities Master Fund II, Ltd., a
Cayman Islands exempted limited company (Cyrus Opportunities), Cyrus Select Opportunities Master Fund, Ltd., a Cayman Islands exempted limited company (Cyrus Select), Cyrus Capital Partners GP, L.L.C., a Delaware limited
liability company (Cyrus GP), Cyrus Capital Advisors, L.L.C., a Delaware limited liability company (Cyrus Advisors), and Mr. Stephen C. Freidheim (each of Cyrus, Cresent, CRS, Cyrus Opportunities, Cyrus Select,
Cyrus GP, Cyrus Advisors and Mr. Freidheim, a Reporting Person and collectively the Reporting Persons). This Amendment No. 1 amends the Schedule 13D as specifically set forth herein. Only those items amended are
reported herein. Capitalized terms used in this Amendment No. 1 without being defined herein have the respective meanings given to them in the Schedule 13D.
ITEM 4.
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Purpose of Transaction.
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Item 4 of Schedule 13D is supplemented by the following:
On May 15, 2013, Cyrus submitted a non-binding written proposal to the Issuer proposing a combination between the Issuer and Tandberg Data in which the Issuer would be the surviving entity (the
Combination). Under the proposal, the Issuers shareholders would own 50% of the Issuer after the Combination and Tandbergs shareholders would own the remaining 50%. A copy of the proposal is attached hereto as Exhibit E. The
description of the proposal contained herein is qualified in its entirety by reference to Exhibit E.
The proposed Combination is subject
to a number of conditions, including, among other things the satisfactory completion of due diligence and the negotiation and execution of definitive documents with representations, warranties, covenants and conditions typical and appropriate for
transactions of this type.
The proposal does not constitute an agreement and Cyrus and the other Reporting Persons may modify the proposal in
any way as a result of negotiations or otherwise or withdraw the proposal at any time. The parties may have discussions and negotiations from time to time regarding the Combination or alternative transactions and such discussions or negotiations may
be suspended or cease at any time. There can be no assurance that any agreement will be executed or that the proposed Combination or any other transaction will receive necessary approvals or be consummated.
While it is not the Reporting Persons intent, the Combination may result in the Issuers Common Stock being eligible for termination of
registration under Section 12 of the Act or delisting from the NASDAQ Capital Market. In such event, the Reporting Persons intend to seek to have Issuers Common Stock continue to be registered under the Act and listed on the NASDAQ
Capital Market, though there can be no assurance that such efforts will be successful or that the Reporting Persons intent may not change in the future.
Except as set forth herein, the Reporting Persons do not have present plans or proposals at this time that relate to or would result in any of the transactions described in subparagraphs (a) through
(j) of Item 4 of Schedule 13D.
ITEM 6.
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Contracts, Arrangements, Understandings or Relationships With Respect to Securities of the Issuer.
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Item 6 of Schedule 13D is supplemented by the information set forth in Item 4 above which is incorporated by reference in
Item 6.
ITEM 7.
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Materials to be Filed as Exhibits.
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Item 7 of Schedule 13D is hereby amended by adding the following exhibit thereto:
Exhibit E: Letter to the Issuer, dated May 15, 2013
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CUSIP No. 690310206
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13D
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SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, each of the undersigned hereby certifies that the information set
forth in this statement is true, complete and correct.
Dated: May 15, 2013
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CYRUS CAPITAL PARTNERS, L.P.
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By: Cyrus Capital Partners GP, L.L.C., its general partner
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By:
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/s/ Stephen C. Freidheim
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Name:
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Stephen C. Freidheim
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Title:
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Managing Member
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CRESCENT 1, L.P.
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By: Cyrus Capital Advisors, L.L.C., its general partner
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By:
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/s/ Stephen C. Freidheim
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Name:
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Stephen C. Freidheim
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Title:
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Managing Member
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CRS MASTER FUND, L.P.
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By: Cyrus Capital Advisors, L.L.C., its general partner
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By:
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/s/ Stephen C. Freidheim
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Name:
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Stephen C. Freidheim
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Title:
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Managing Member
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CYRUS OPPORTUNITIES MASTER FUND II, LTD.
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By:
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/s/ Stephen C. Freidheim
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Name:
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Stephen C. Freidheim
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Title:
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Authorized signatory
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CYRUS SELECT OPPORTUNITIES MASTER FUND, LTD.
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By:
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/s/ Stephen C. Freidheim
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Name:
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Stephen C. Freidheim
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Title:
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Authorized signatory
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CYRUS CAPITAL PARTNERS GP, L.L.C.
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By:
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/s/ Stephen C. Freidheim
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Name:
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Stephen C. Freidheim
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Title:
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Managing Member
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CYRUS CAPITAL ADVISORS, L.L.C.
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By:
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/s/ Stephen C. Freidheim
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Name:
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Stephen C. Freidheim
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Title:
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Managing Member
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/s/ Stephen C. Freidheim
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Stephen C. Freidheim, individually
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CUSIP No. 690310206
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13D
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Exhibit E
May 15, 2013
Eric L Kelly, President & CEO
Overland Storage, Inc.
125 S. Market Street,
San Jose, CA 95113
9112 Spectrum Center Blvd., San Diego, CA 92123
Dear Mr. Kelly,
Following our recent discussion, we are pleased to present to you a proposal
in regards to a business combination between Tandberg Data (Holdings) Sarl (Tandberg) and Overland Storage Inc. (Overland) (the Transaction) . We look forward to working with you on a consensual basis to conclude
a formal agreement and move forward to implement the Transaction. Overland Storage and Tandberg are two companies with complementary structures and culture, and a combination represents a very good strategic and industrial fit.
As you are aware, Cyrus and FBC Holdings Sarl (FBC, an affiliate of Cyrus and Tandbergs shareholder) have been in discussions with you
about a business combination between Tandberg and Overland for some period of time. Each party has completed substantial due diligence, has shared financial information and collectively examined the synergies and value creation that could be
realized by a combination of the two businesses.
As you are aware, Cyrus Capital Partners, L.P. as investment manager for certain funds which
invested in the Overland convertible debenture were required as a result of their shareholding on an if converted basis to file on February 12, 2013 with the SEC on Form 13D certain disclosures relating to those funds investment in
Overland. There is a requirement to update that filing based on material changes. As a result we will be required to append this letter to the revised filing.
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CUSIP No. 690310206
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13D
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Rational for the Transaction
We wish to reiterate why we believe that a transaction between Tandberg and Overland makes economic and business sense for both parties.
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Substantial cost synergies should facilitate profitability and cash generation post integration and restructuring
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The two companies channels and route to market are complementary
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Both companies share a common target market business users and a complementary customer base
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Complementary products should drive a greater relevance and share of a customers purchases
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Opportunity for additional RDX removable hard disk license revenues
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Much larger sales team with far greater geographic and account coverage
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By combining the complementary NAS technology and product portfolio from both companies more markets will be covered allowing for significant increase
in revenue
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Geographic expansion for Overlands product set
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Potentially new opportunities with global OEM accounts
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Stronger marketing organization can provide much greater efficiency and drive demand
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Stronger R&D capabilities to protect and grow existing business as well as develop innovative products for the future
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Tandberg tape automation engineers can provide continuity to the automation business for both companies
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This should also protect and enhance the significant service revenue that Overland has created over the years
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Tandberg has a world class manufacturing and integration facility in China
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Greater scale and market presence would provide an opportunity to compete more effectively
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Further, despite the fact that FBC will become a significant shareholder in Overland if the Transaction is consummated, it is anticipated that the
current Overland board will comprise a majority of the directors post-closing and Overland will be the surviving business entity. We continue to have confidence in both the Overland and Tandberg management teams and their ability to run a larger
integrated business.
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CUSIP No. 690310206
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13D
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About Tandberg
Tandberg is a global leader in data storage and protection solutions for small and medium-sized businesses, remote offices, workgroups and departments of large enterprise companies. The
companys wide range of cost-effective storage products and services provides customers with best-in-class tape, disk, removable disk and software solutions for backup, archiving and disaster recovery. These solutions are marketed through
a global channel of qualified resellers, distributors and major server OEMs. An extensive service and support network supports Tandberg products worldwide. Tandberg also owns and operates an outsourced manufacturing facility in China which
offers manufacturing and servicing for both Tandberg and external customers products. Tandbergs revenue for the calendar year ended 2012 on a US GAAP basis was approximately $67 million.
The Proposal
The terms of the Proposal
are as follows:
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Overland would acquire Tandberg on the basis of a merger of equals (i.e., Overlands shareholders, on a fully diluted basis, would own 50% of
Overland after the combination and Tandbergs shareholders would own the remaining 50%)
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In addition, it is anticipated that the Transaction may include an opportunity for Overland shareholders to receive cash for a portion of their
shareholdings in Overland
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In conclusion, we believe that now is the time to effect a business combination of Overland and
Tandberg. Currently Overland is not free cash flow positive and the company is burning cash as it completes its business transition and strategy implementation. A deal with Tandberg will greatly improve both the size and scale of the business and
will allow the combined entity, in our opinion, to generate significant free cash flow versus historical performance.
Please confirm that
Overlands board of directors has agreed to this proposal in principal by 12:00 pm (Eastern Standard Time) on May 18, 2013 or this proposal shall automatically terminate and the offer to entertain negotiations with respect to the
transaction on the terms set forth herein shall automatically be withdrawn. We reserve all rights with respect to other offers or actions that we may choose to make in relation to Overland. We look forward to entering into consensual discussions
with you to move towards final transaction documentation and hope that you will find our proposal constructive. Except for the following paragraph, our proposal set forth herein is non-binding, and is subject to due diligence and the negotiation and
execution of definitive transaction documents.
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CUSIP No. 690310206
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13D
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Upon acceptance of the proposal, Overland expressly agrees to enter into an exclusivity period with
Tandberg for a period of 90 days, during which it shall notify Tandberg of any approach made by a third party with respect to a merger, amalgamation or purchase, or other analogous transactions, for all or a portion of Overlands shares or
assets and an agreement not to negotiate with such parties. If Overland accepts a competing offer or its board recommends that shareholders accept a competing offer with respect to any of the transactions described above during the six months
following the date of this letter, Overland agrees to pay FBC Sarl, a break fee equal to $1.5 million and 25% of any value proposed above our proposal.
We look forward to working with you to conclude this mutually beneficial transaction for both our companies.
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Very truly yours,
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Cyrus Capital Partners L.P.
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By:
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/s/ Stephen C. Freidheim
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ACCEPTED AND AGREED
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Overland Storage, Inc.
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By:
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Eric Kelly
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Chief Executive Officer
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