Santa Ana-based disk drive maker STEC Inc. has announced its annual shareholder meeting will be on May 13, setting up a potential showdown between the company’s management team and a group of dissident investors who’ve called for sweeping executive and director changes.
Talks to avert a proxy battle with San Francisco-based private equity firm Balch Hill Capital LLC and Potomac Capital Advisors in New York broke down last month. Balch holds a 9.8% stake in STEC, and Potomac has a roughly 1% stake.
Balch Hill wants to replace all seven of STEC’s board members.
STEC has left room for further negotiations but signaled a willingness to fight.
“We continue to work with them to come up with an amicable agreement,” STEC interim Chief Executive Mark Moshayedi told the Business Journal late last month. “If it comes down to a proxy fight, then it comes down to a proxy fight.”
STEC makes flash memory drives for corporate data networks. The products are known as solid-state drives and use chips instead of spinning disks to store data.
Balch Hill has called for a sale of the company, which it claims has “lost the trust of its key constituents.”
STEC has denied those charges.
Potomac joined Balch Hill in a recent securities filing, contending “shareholder value is at risk without a reconstituted board.”
The dissidents have criticized STEC’s decision to respond to increased competition by going into new product lines and boosting spending on research and development, with little to show.
STEC recently announced newly established sales programs targeting end users in a bid to win more business in various sectors, including financial services, oil and gas, and telecommunications.
The bid for sales to end users would supplement the company’s focus on original equipment makers, which install the company’s solid-state drives into data centers and computers.
The push for a new board comes as former STEC Chief Executive and Chairman Manouchehr Moshayedi, Mark’s brother, faces insider-trading accusations levied by the Securities and Exchange Commission.
STEC has seen sales fall dramatically in the past year, while its share price has dropped nearly 58% to a market value of about $167.1 million.
Identive Makes Stock Agreement
Santa Ana-based Identive Group Inc. said it has entered a $20 million common stock purchase agreement with Chicago-based institutional investor Lincoln Park Capital Fund LLC.
Lincoln will purchase $2 million in common stock from Identive at a price of $1.14 per share, according to Identive. Over the next three years, Identive can sell up to $18 million of common stock to LPC.
Identive noted that proceeds are earmarked for working capital requirements and general corporate purposes, including product investment.
Identive relies on its scanners, readers, cards and other security devices for buildings and computers for the bulk of its $94.5 million in annual sales but recently has seen demand rise for its near-field communication products.
The company posted an adjusted profit of $601,000 in the fourth quarter, compared to a loss of $1.2 million a year earlier, and it beat Wall Street expectations. The gain marked the first time in more than a year that the company operated in the black.
Emerging NFC technology allows users to swipe a cellphone over tags or readers to make financial transactions. It also provides access to websites and other applications.
LPC targets longer-term investments in the life science, special financing, energy and technology sectors.
Startup Boosts OC Presence
Growing demand for service management software and a recent $27.5 million fundraising round has prompted New York-based startup Booker Software Inc. to grow its OC operation.
The company has added some 20 people to its OC hub and plans to add another 10 by the end of the year, according to Chief Executive Josh McCarter. Its local workforce is about 30.
“We’ve seen a tremendous amount of companywide growth in the last 18 months,” said McCarter, the former president and chief operating officer of Irvine-based computer products distributor Arbitech LLC. “We see an opportunity to service businesses.”
The company’s Booker Platform for scheduling appointments, reservations and various services via the cloud now is used by more than 5,000 businesses in 73 countries, McCarter said.
Sizzling sales—the company has tripled revenue in the past year—have prompted two moves in OC to accommodate growth.
It moved late last year into a 6,500-square-foot space in Newport Beach, where it handles sales and support, after outgrowing a location near the Back Bay.
Booker, which changed its name in November from GramercyOne LLC, recently secured Series B funding led by Bain Capital Ventures. Prior backers—Revolution Ventures, Grotech Ventures, TDF Ventures and Vital Financial—also participated in the financing round.
Booker plans to use the proceeds to invest in technology and products, as well as to add marketing and sales personnel, McCarter said.
The company added more than 130 employees in 2012 and now counts more than 200 companywide.
Chris Casacchia can be reached at casacchia@ocbj.com
