The Zenith Infotech-Zenith RMM Deal: Will Financial Details Emerge?

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.
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