History (1996): Gigastorage Chairman and CEO Dimitrov in Jail

Gilgastorage International S.A. (Belfort, France), a new manufacturer of HDDs, has gotten off on the wrong foot.

COB and CEO Bisser Dimitrov was arrested February 8 In Belfort by French police, and placed in prison for violation of financial regulations.

The tempestuous soap opera that has overtaken Gigastorage began last January 25.

Although the firm has or will receive nearly FF23.5 million ($4.7 million) in financial assistance from the state and local government in return for the creation of 270 jobs in the short term, and a total of 600 in all, the local population was dismayed to learn of the arrival of 45 Malaysians and 2 others from Singapore, some very young, all headed for the Gigastorage plant.

In fact, the company shipped them over on a plane from Kuala Lumpur, Malaysia, to Zurich, Switzerland. A bus engaged by the company was waiting at the airport to conduct the Asian passengers directly into France. With the help of mobile telephones, however, the chauffeur was warned that French immigration police intended to intercept t he bus. The driver headed for Germany instead, and attempted to cross the French border at Mulhouse. But the police were already waiting, and for bid the Malaysians’ entry. The prospective Gigastorage employees were stuck in the Hotel Nike in Lorrach awaiting news of their fate.

Gigastorage’s CEO Bisser Dimitrov claims to have alerted local authorities about the mass arrival of foreign workers yet the group stopped at the border were not in possession of valid working paper for France. The Asian team seems to have come from a Conner Peripherals plant in Malaysia, where Gigastorage would have acquired several HDD drive assembly lines. Pressed to fulfill an order from the German firms Escom and Vobis for 40,000 units (IPC and Computer 2000 have also been mentioned), the French company brought the Malaysians over because they were already with the production process, and could thus train the French hires. Besser Dimitrov also hoped to use the imported workers as a means to compare the productivity of French employees who would be working side by side on a parallel production line. In the end, the Malaysians were sent back to Kuala Lumpur at Gigastorage’s expense.

Of course, the local press had a field day with the affair, and one daily in particular, Le Pays, fed its readers full pages, day after day, on the unfolding of events. The French national press (Le Parisien Libéré, Le Monde, Agence France Presse) covered the episode, as did the national TV station, France 2, which made it their top story on the 8 o’clock news.

This media interest may also be explained by the novelty of the company’s employment policy. Up to now, the general trend has been towards “de-localization,” which is to say, a movement away from Western countries to plants in the Far East, where labor costs are less. Without meaning to, Dimitrov has developed a new trend, that of “re-localization ,” which, while still employing Asian labor, resituates the factory in Europe. In fact, Gigastorage has no intention of making Belfort its primary manufacturing plant. A project was already underway to have a new assembly plant in the Far East next March.

January 31, alerted by Gigastorage’s strange behavior, French police searched the former Bull Peripheriques facility to check the identity of 20 or so other Gigastorage managers and technicians of foreign nationality. German, Bulgarian and American nationals were taken to the police station, and 4 who lacked the necessary working papers were detained .

Another episode involving the company did not help matters much. Among one of the minor stockholders and board members of the start-up firm, is Jean-Pierre Maillot, from ADEPT, an economic development agency in the region that underwrote many of the subsidies Gigastorage receive. Although it might be reasonable for ADEPT itself to act as a shareholder in order to better supervise the management of Gigastorage, it does seem strange that one of its employees be personally implicated in the company.

The worst was yet to come. On February 8, (CDSN’s editor lunched with Dimitrov the same day!), the company chief was returning from Los Gatos, CA, by way of Paris, France, where he stopped to meet with a brokerage company, Tocqueville, near the Champs-Elysées. That same evening, on his return to Belfort, Dimitrov phoned the local police to see how the situation was progressing. Several hours later, the police descended on ADEPT to take him into custody. The whole affair has quickly become a media circus, and nearly all of the French press has picked up the story, with the international press quickly following on its heels. At press time, Besser Dimitrov was still in prison.

The major shareholders
Gigastorage International SA was founded on April 1, 1994 with capital of FF21.5 million ($4.3 million). Below are the most important stockholders:

• HFT, 34% (Hungarian bank)
• CWA Bank, 25% (Austrian bank)
• Mssrs. Dimitrov, Fisher and Volker, 7% each (all 3 were investors in Orca, which has since folded)
• Sibel, 6% (Belfort organization responsible for placement of former Bull employees)
• Plus, several small banks and individuals

A second offering was expected in the near future to increase the capital to $10 million. Compaq is hoping to grab 15% of Gigastorage and thus repeat, in some respects, it’s earlier transaction with Conner Peripherals in which Compaq undertook massive investments in order to receive priority shipments of drives at good prices. Dimitrov had expected a third offering to sell 25% of the company for $15 million, to several organizations in the Japanese Sumitomo group, in particular.

HDDs manufactured by Gigastorage
From the start, Gigastorage hoped, in vain as it turns out, to acquire a line of 3.5-inch disk drives that Maxtor was relinquishing. The plan, an original one, was to put together a device in the 5.25-inch form factor, with a height of only one inch, consisting of one Komag platter with 1.256GB capacity, then other drives with 2 and 3 platters.

This configuration would have permitted an extremely low price that could compete even with 3.5-inch drives of the same capacity, but with 2 platters and at least 3 heads, hence more costly.

Maxtor could be interested in acquiring Gigastorage’s new design, to the tune of roughly $5 million, which would satisfy Compaq’s desire (the latter firm has long been interested in the product) to have a second manufacturing source.

The first Gigastorage’s model, named Stealth, with EIDE interface, uses 2 MIG heads purchased from Kaifa and SAE. Its platter spins at 3,600rpm and the access time is 10ms. The anticipated MTSF is more than 250,000 hours.

Design of the devices was realized exclusively by the wholly-owned subsidiary, Belfort Memory International, located in Los Gatos, CA, and employing 67 engineers, the majority of which came from Aura Associates under the leadership of Phil Micchiche.

There are currently 2 Belfort production lines, capable of a manufacturing capacity of 1,000 drives per line, per day. Dimitrov’s objective was to add an additional 6 lines before April.

This article is an abstract of news published on the former paper version of Computer Data Storage Newsletter on issue 97, published on February 1996.

Look also at Oral History of Bisser Dimitrov, an interview from Jim Porter, recorded on July 7, 2005