bbgold,
Got back in this morning. I'm in for buyout speculation.
Cheers,
Francois
CrossKeys in discussions with UK telecom firm
By Jeff Jedras, Ottawa Business Journal
CrossKeys Systems is in discussions with a number of telecommunications companies regarding a possible sale or
strategic partnership with the Ottawa company and may be close to a sale.
The Ottawa Business Journal has learned that CrossKeys is in discussions with Orchestream PLC, a UK-based
developer of software for activating services on, and enhancing the performance of, Internet Protocol (IP) networks,
regarding the purchase of CrossKeys.
The two companies have worked together in the past, signing a software partnership in March 2000 to automate
delivery of IP services such as intranet and extranet virtual private networks, voice over IP and hosted application
services.
Orchestream was also mentioned by CrossKeys chair Terry Matthews at a company staff meeting Jan. 4 as a possible
suitor for CrossKeys, either as a buyer or a strategic partner.
CrossKeys retained CIBC World Markets Dec. 13 to "identify and evaluate strategic alternatives to enhance shareholder
value," which is corporate language for the company gearing up for a possible sale.
CrossKeys spokesman John Blackmore says the company is looking at a number of potential firms that might have an
interest in the company, but he cannot comment on specific names.
"We wouldn't have any comment on that," says Blackmore. "When we announced we're working with CIBC World
Markets a number of companies expressed an interest, and so we're engaged with those discussions."
Blackmore also denied a sale to Orchestream, or any company, is imminent.
"We're not in an position to say," said Blackmore. "As soon as we have information that the market should be hearing,
we will definitely be communicating that in a timely fashion."
Bert Powell, a research analyst following CrossKeys for BMO Nesbitt Burns, says he's heard Orchestream and
CrossKeys mentioned together in the past but not recently, and not in the context of a sale.
"It would seem possible, sure," says Powell. "I know CrossKeys is looking at alternatives, and I would assume those
alternatives would include the exploration of a sale, but I don't know (anything) specifically."
Powell says that Orchestream is the type of company that would be interested in acquiring CrossKeys.
"Another OSS company would be a logical candidate, but it's tough to say," says Powell. "It's going to be someone in
the telecommunications field, whether that's a equipment vendor or a software company (I don't know)."
The trouble for CrossKeys began on Dec. 4, when the company released an earnings warning, telling investors it could
lose as much as $20.5 million, or $1.07 a share, in the quarter because of a failure to close key contracts. The company
also said it was facing a serious cash crunch.
The company announced it was retaining CIBC World Markets Dec. 13, and the next day Matthews gave the company
some time to look at its options by issuing CrossKeys an $8 million credit facility, with the company inviting other
shareholders to lend up to an additional $8 million under the same conditions as Matthews.
CrossKeys unveiled a restructuring plan, which including laying off 75 people, or about 23% of its employees, at a staff
meeting Jan. 4. The company also reduced its slate of VPs to four, announcing that veteran VP Engineering Ella Mar and
VP Sales Hugh Brownlee would be leaving the company. |
