Zenith Infotech CEO: We’re Financially Solvent, Strong, Stable
In an open letter, Zenith Infotech CEO Akash Saraf has responded to questions about the company allegedly defaulting on a bond payment. Saraf confirms the default but assures customers and vendors that Zenith Infotech is “financially solvent, strong and stable.” Here’s the letter in its entirety — plus some perspective from MSPmentor.
The letter stated:
“To our valued customers, vendors and friends:
Recently it was reported that Zenith Infotech defaulted in its payment obligations to certain foreign-currency convertible bond holders. Although factually correct, the news coverage did not provide an accurate picture of the company’s business and financial stability.
Let me be clear: Zenith Infotech is financially solvent, strong and stable. Our customer base for BDRs, MirrorCloud and SmartStyle continues to grow tremendously.
Zenith Infotech provides state-of-the-art business continuity and private cloud services to customers worldwide, and will continue to do so into the future. Our employees are among the best in the industry, and our technology and innovation is both envied and unmatched.
We are actively discussing our debt obligations with our bond holders. We are optimistic that the process will result in financial terms that are acceptable to everyone. Our ongoing operations are not affected by this.
We are committed to continuing to serve your needs.
Kind regards,
Akash Saraf
CEO”
The Back Story
Saraf’s open letter arrives after Zenith Infotech defaulted on $33 million foreign currency convertible bonds (FCCBs), which were due Sept. 21, according to Reuters. Zenith Infotech’s stock has fallen sharply in recent weeks on the Bombay Stock Exchange. Few people had heard about the default in September, but speculation about the situation spread across India’s media earlier this week, and MSPs started contacting MSPmentor about the speculation on Sept. 12.
Separately, Zenith RMM — which Summit Partners essentially acquired from Zenith Infotech in September — says it continues to partner with Zenith Infotech. However, Zenith RMM CEO Michael George told MSPmentor that Zenith RMM is a separate, independent company from Zenith Infotech.
If/when Zenith Infotech announces a new agreement with its bondholders, MSPmentor will offer follow-up analysis.
I have a tough time believing any zenith press releases after being falsely mislead about box office a couple years back and the mixup with the beta program. Not going to get into the pettiness, but apparently zenith was not only dishonest with their clients/partners…but also their financial-banking partners? What’s your editorial take on the integrity of these actions and would you do business with them JP? As a client or a financing partner?
Tony,
I don’t have first-hand experience running Zenith Infotech solutions (or rival solutions for that matter). But generally speaking I would recommend MSPs take the following steps as part of an annual business review…
1. Does my existing IT solution set continue to meet my business needs?
2. Do I need a new set of tools to meet emerging or evolving IT opportunities that I need to address within the next three to 12 months?
3. Are my current vendors responsive to my IT support inquiries?
4. Do the tools in my solution set really worked as advertised?
5. How much will it cost to change IT solutions, and what’s the potential ROI of such a change?
But to answer your questions more directly, Tony: I’ve never dealt with Zenith Infotech in the technology market. I’ve only dealt with the company on the editorial front. I’ve found all of the editorial conversations to be honest.
I think Zenith has two challenges…
1. The debt: I think MSPs should watch the Zenith-bondholder debt negotiations closely. I’ll remind readers that situations like this can be pretty common. A key way for companies to gain better terms on debt is to stop paying the debt and then re-negotiate the terms. So on the one hand, this could simply be Zenith trying to gain leverage with bondholders. But on the other hand, I realize partners want to make sure Zenith is healthy so track the debt negotiations news.
2. Communications: If I was to ding Zenith on anything it would be lack of communication while the debt story was unfolding. Zenith missed the bond payment back on Sept. 21 I believe. The story started to trickle out around Oct. 11 or 12. Instead of communicating the situation, Zenith was largely silent as its stock fell sharply much of the week of Oct. 11. In retrospect, Zenith should have gotten ahead of the story and issued a statement sooner.
Side note — my own biases: Zenith has sponsored our brands in various ways for at least two years… perhaps longer. Just wanted to point that out so readers can draw their own conclusions about our coverage. We’ll continue to track the story.
-jp