The Zenith Infotech-Zenith RMM Deal: Will Financial Details Emerge?
Deeper details about Zenith Infotech‘s financial state may potentially emerge. Zenith Infotech, which defaulted on a bond payment in September, has been ordered by the Mumbai high court to disclose details about the recent Zenith RMM business spin-off, according to the Economic Times. If those Zenith Infotech-Zenith RMM financial details emerge, it could shed light on a range of matters. Here’s why.
First, the background: Zenith Infotech essentially sold Zenith RMM to Summit Partners, a private equity firm, in September 2011. Around the same time Zenith Infotech defaulted on a bond payment, though CEO Akash Saraf said the company was financially solvent, strong and stable.
Soon after, bondholders filed a petition to learn more about the Zenith RMM spin-off, in which Zenith Infotech still holds a minority stake. Apparently, Mumbai’s high court has now ordered Zenith Infotech to disclose financial details about the Zenith RMM spin-out.
MSPmentor has reached out to Zenith Infotech and Zenith RMM for comment about the alleged court order. Assuming the court order exists, will Zenith Infotech comply? Is there an opportunity to appeal? We’re checking.
Potential Implications
If Zenith Infotech does disclose financial details about the Zenith RMM spin-out, it could shed new light on:
- Zenith Infotech’s overall financial standing.
- Zenith RMM’s valuation, which could help other MSP software providers as they potentially pursue a range of funding options.
- Zenith RMM’s ownership percentages. Generally speaking, it sounds like Summit Partners is Zenith RMM’s majority owner, with Zenith Infotech maintaining a minority stake. But the percentage ownership figures have not been publicly disclosed.
- Zenith Infotech’s potential ability to negotiate a new debt agreement with bondholders.
Of course, that bullet list could be off the mark — especially if the financial details (A) never get disclosed or (B) remain confidential between the court, Zenith Infotech, Zenith RMM, Summit Partners and bondholders.
Meanwhile, a range of cloud storage providers continue to pursue Zenith Infotech’s installed base, offering special deals, discounts and migration services to partners that may be seeking market alternatives. Also, Zenith Infotech is gearing up for the IT Nation conference (Nov. 9-11, Orlando), where the company is expected to offer updates on its cloud strategy.
Disclosure: I work at eFolder, a Zenith Infotech competitor.
A steady stream of bad news continues to emerge in the Zenith Infotech saga and unfortunately, partners are essentially in the dark. It is surprising how much mystery there is in this case, even though Zenith is a publicly held company in India. Financial details are murky. Though I am an MBA trained professional, I can not square Zenith’s financial statements, especially their balance sheet disclosures, with news reports they have $83 mil in debt. Part of the problem is different disclosure requirements in India vs. the US and another part is the method of describing assets and liabilities on the balance sheet.
For partners concerned about Zenith’s financial situation, you should check out the eFolder BDR Rescue Program. This is the only BDR migration plan in the market that allows you to keep the Zenith BDR in place, while migrating your offsite data to a stable cloud provider, like eFolder.
http://www.efolder.net/rescue
http://issuu.com/ehulsy/docs/efolder_bdr_rescue_program_brochure
Ted Hulsy
VP of Marketing, eFolder
ehulsy@efolder.net
Zenith Infotech’s Technical Training Program Headed for a Global Road Tour
Success of cloud computing boot camp program leads to international expansion
WARRENDALE, Penn. – November 2nd , 2011 – Zenith Infotech, a technology innovation company that specializes in delivering innovative business continuity and cloud computing solutions for IT service providers, today announced the launch of its international cloud computing boot camp training programs. The road tour is programmed to start in November with markets such as Los Angeles, Dallas and Orlando. Subsequently, it will expand to South and Southeast Asia, in addition to the Middle East.
“The number of partners who are evaluating and adopting our cloud computing solution, SmartStyle, is rising,” states Zenith Infotech CEO, Akash Saraf. We have had a wait list for our boot camps for several sessions. We felt that given the demand and the strength of our course, it was time to take the training to the locations where we have a high concentration of partners.
According to Ron Hogue, manager of technical training at Zenith Infotech, “Almost 200 participants have attended our new U.S. boot camp programs so far in 2011. Another 100 partners are likely to go through the program by the end of the year. Because the training is free and practical in nature, it’s very effective. These camps also offer an opportunity for partners to gain insight on best practices with members of our executive team.” In addition, as part of its efforts to engage with current and future partners at many touch points as possible; Zenith Infotech is attending over 320 overall events this year, including the boot camps.
“The excellence and popularity of our technical training program is a testament to our dedication to our partners and the strength of our products. Millions of dollars have been spent on the research and development of our cloud solutions. Our company is resilient, tenacious and well-equipped to face the changing technology space across the world. I am confident that our boot camps will provide the necessary tools to help all our global partners build a successful business platform in the cloud,” adds Saraf.
About Zenith Infotech
Zenith Infotech is an international company that specializes in delivering innovative business continuity and cloud computing solutions for IT service providers. Our U.S. headquarters is located in Pittsburgh, Pennsylvania. Learn more at http://www.zenithinfotech.com.
Zenith RMM’s Valuation May have been Higher
Zenith RMM’s Valuation May have been Higher
MAULIK VYAS amp; N SHIVAPRIYA
MUMBAI
IT firm Zenith Infotech recently disclosed . 104 crore as gains from the sale of its managed services division in its results statement for the September 2011 quarter. But a statement made in the Mumbai High Court on Tuesday indicates the division may have been valued much higher by private equity firm, Summit Partners, which bought it.
Summit Partners, a USbased PE firm, paid . 250 crore to acquire stake in Zenith RMM, a spin-off of Zenith Infotech, according to the statement made in court, raising questions over the difference in valuation and whether shareholders of the IT firm have realised the full benefit from the sale of the division. However, a clearer picture could emerge only once the full details of the transaction are made public.
A mail sent to Zenith Infotech’s chairman and director, Raj Saraf and its managing director Akash Saraf, seeking clarity on the difference did not receive a response till the time of writing.
The transaction was structured as a spin-off to Zenith Monitoring Services, a Mumbaibased firm and subsidiary of Zenith RMM, in which Summit Partners invested two days after the spin-off. Zenith Infotech disclosed in its filings to the stock exchange that it was spinning off the division to Zenith Monitoring by way of an asset transfer agreement. But the valuation at which Summit Partners invested has become public only because the trustees of the offshore bondholders in Zenith Infotech have taken the company to court over a default in payment.
In October, in response to a plea by the trustees of the bondholders, the Mumbai High Court directed the PE firm, Zenith Infotech, Zenith Monitoring, and Zenith RMM as well the promoters, Raj Saraf and Akash Saraf, to separately disclose the consideration they received, and full details of the transaction.
The order nullified any confidentiality agreements that cover the valuation and other details relating to the sale and purchase of the asset. Summit Partners has asked for the transaction details to be kept private between the court and the bondholders.