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Re: SVB effect - from the last 10KNetlist needs to issue a clarification (see example below from another company today) so that investors are clear on the precise nature of the relationship and extent of exposure. As of 12/31/22, Netlist had $25M in cash plus $18.6M in restricted cash on their balance sheet. How much of the corporate treasury was held within SVB accounts. From another board: https://www.investorvillage.com/groups.asp?mb=19168&mn=486801&pt=msg&mid=23962889 I would guess we will see many of these types of pressers over the weekend: FREMONT, Calif., March 10, 2023 (GLOBE NEWSWIRE) -- Aehr Test Systems (NASDAQ: AEHR) (the “Company”), a worldwide supplier of semiconductor test and reliability qualification equipment, today provided comments on the news today of the closure by regulators of Silicon Valley Bank (SVB). Gayn Erickson, President and CEO of Aehr Test Systems, commented, “There’s been a lot of questions related to the closure of SVB today and the exposure of Aehr Test Systems. Aehr Test does have a checking account at SVB with a current balance of under $2.5 million, which is less than 6% of our total of $41.8M in cash and short-term liquid assets. Aehr has over $39.3 million in another financial institution which includes over $9.7 million in cash and $29.6 million in short term US Government backed Treasury Bonds. Aehr has no outstanding balance on its line of credit with Silicon Valley Bank and foresees no need to draw on the line in the near future. Aehr believes that there is no impact to our operations, customers, vendors, or employees. We are taking all appropriate steps to prevent any impact on our operations.” ____________________ SVB was not just a dominant player in tech but were highly integrated in some nontraditional ways. A few things we'll see in the coming days / weeks... One, SVB was incredibly integrated into the lives of many founders. Not just their startup's bank & lender, but also provided personal mortgages and other financial services. A whole mess for FDIC (or the eventual buyer) to unwind. Two, any "uninsured" balances at SVB - those above $250K - are in jeopardy. FDIC plans to pay them out "as it sells the assets of SVB". Lots of startups exclusively banked with SVB as *this was a covenant of their debt*! CEOs yesterday faced a hard choice: Pull your deposits and go into default on your venture debt or risk losing everything if the bank failed. Many chose to hold tight as SVB's outright failure seemed outlandish. Now they may not be able to make payroll next week. Unpaid wages pierce the corporate veil, so boards are *incredibly* sensitive to employing workers they may not be able to pay. Expect mass layoffs later today, Monday at latest. And given the weak fundraising environment, a number of startups have been reliant on venture lenders - e.g., SVB - not aggressively pursuing amortization of debt or triggering default for covenant foot faults (e.g., cash balances). How will the FDIC handle this? Mass defaults? Having run a startup through the GFC, this is the first thing I've seen since that is even vaguely reminiscent of that time. Total clusterfuck. One more thing: SVB also offered *wealth management services* to many of its founders. So your corporate lender, corporate bank, personal mortgage lender, and family's wealth manager is... all one bank, which is now in FDIC receivership. Fun. |
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