By David B. Gorman/Bloomberg CloudX Inc. (CX.
N) filed for Chapter 11 bankruptcy protection on Friday after two weeks of talks with its lenders, prompting a surge in the stock price.
The stock closed at $18.60, up 5.8% after the filing.
It has lost over half its value since the end of May, when it was trading for $13.40.
CloudX is seeking to return as much as $1.2 billion to shareholders, but it is facing growing pressure to raise more money to stay afloat.
CloudX Inc., which is owned by the Alibaba Group, raised $1 billion in a private financing in 2015.
But the deal was contingent on raising at least $1 million from investors in a round of private financing that was never done.
Cloudx has raised around $100 million in its Series A round of financing, according to the filings.
In the second quarter of 2018, it had $8.3 million in cash and $7.1 million in debt.
Cloud X’s financial statements for the past three years show the company had $2.6 million in net income, according a recent investor presentation.
That includes revenue of $4.4 million, which included sales of 1.4 billion cloud-based products and services in 2017, the company said.
Cloud said in a filing last month that it had been struggling to make progress in the cloud-computing business.
Its revenue has fallen short of expectations since its inception in 2008, and cloud-storage revenue has also declined.
The company said in June that it expects to report a loss of $3.6 billion in 2019.
Cloud is the third largest cloud-services company in the world by revenue, and its chief executive officer, Daniel Lee, was named in the Federal Bureau of Investigation’s “most wanted” list.
The company is also facing regulatory scrutiny in China, where it was one of the world’s largest cloud providers in 2019 and is the largest of its kind in the U.S. But it says it plans to file for bankruptcy protection in the country.
Cloud was acquired by Alibaba Group in 2014 for $US1.1 billion.