Quantum Enters into Definitive Agreement with Dialectic and Other Lenders to Restructure Term Debt

Quantum Corp., a key player in solutions for AI and unstructured data, today announced it has entered into a definitive agreement (the “Transaction Agreement”) to restructure the Company’s outstanding term debt held by Dialectic Technology SPV LLC (“Dialectic”) and certain other lenders. In addition, Quantum amended its existing term loan credit and security agreement with its current term loan lenders to remove the financial covenants therein.

Highlights of Transaction

• Ability for Dialectic term debt of approximately $52 million to be exchanged for senior secured convertible notes that have a three-year maturity (the “Debt Exchange”)
• Eliminates existing requirement that capital raised to date through the Company’s Standby Equity Purchase Agreement (the “SEPA”) be used to repay the existing term loan
• Allows up to an additional $15 million of SEPA proceeds to be retained by the Company for working capital and general corporate purposes
• Eliminates existing leverage and minimum liquidity covenants
• Issued Dialectic a warrant to purchase 2,653,308 shares of the Company’s common stock as consideration

“This transaction to restructure a substantial portion of the Company’s outstanding term debt represents a significant step toward our goal of becoming debt-free,” stated Hugues Meyrath, CEO, Quantum. “The proposed exchange of term debt for convertible notes demonstrates Dialectic’s belief in the Company’s strategic vision and long-term growth opportunities, while also aligning Dialectic as a future strategic partner. In addition, we believe this transaction provides increased financial flexibility to execute on our operating initiatives and revitalized go-to-market strategy.”

“This important milestone in our financial transformation follows the recent rebuilding of our Board of Directors and executive team, including leadership changes throughout the organization. We believe the increased financial flexibility provided by this transaction allows us to focus on our goal of delivering profitable performance and revenue growth,” continued Meyrath.

“This transaction is an important milestone in Quantum’s ongoing operational and financial transformation,” stated John Fichthorn, managing partner, Dialectic Capital Management, investment advisor to Dialectic. “At Dialectic, we are committed to supporting the management in building a focused, profitable, and growing storage technology company with a clear strategy and strong alignment across all stakeholders. By restructuring the balance sheet and positioning Quantum for growth, our goal is to align the interests of management, employees, and shareholders through the performance of the equity.”

The closing of certain transactions contemplated by the Transaction Agreement is subject to certain conditions, including the approval of the Debt Exchange by the Company’s stockholders.