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ATLANTA, GA -- (June 19, 2006)
-- Verso Technologies (VRSO), a global provider of next generation
network solutions, announced today that on June 16, 2006 it acquired a limited
liability company that holds the majority of the business assets of Verilink
Corporation and Larscom Incorporated, global providers of converged voice and
data access equipment and services to carriers and enterprises, from Winslow
Asset Group, LLC, an affiliate of SCS Fund, LP. The purchase price of
approximately $5.8 million was paid through the issuance of shares of Verso
capital stock.
Verilink Corporation, including its subsidiary Larscom Incorporated, has a broad
suite of products that are supported by a value-added professional services
team. The Verilink product suite includes products that provide access,
multiplexing and transport of voice and data services that extend legacy
networks as well as next generation converged access solutions that deliver
voice, data and video to business customers. These solutions are all supported
by a strong revenue-generating professional services team that offers turn-key
provisioning, installation, turn-up and ongoing maintenance and support
services.
Verilink’s technology solutions align well within Verso’s product portfolio,
specifically with regard to access solutions. The acquisition gives Verso a
significant presence in the North American marketplace with established
relationships with several Tier-1 customers including Verizon, AT&T/SBC, and
MCI. It also provides the company with several important distribution
relationships, including Lucent Technologies. Verso plans to integrate and
leverage these channels to generate additional sales with Verso’s own solutions
as well as distributing Verilink products into Verso’s international base of
customers and distributors. In addition, the Verilink managed service business
comes with a recurring revenue stream of approximately $2 million per quarter.
This business substantially increases Verso’s managed service capabilities
domestically and internationally. The company expects that Verilink’s acquired
business will be cash flow positive on an annual basis. Additionally, Verso
will be receiving experienced management, sales and professional services
personnel with strong relationships with large carriers in the US and throughout
the Americas.
“Verso’s ability to acquire the key assets of Verilink was very opportunistic
and extremely fortunate,” said Steve Odom, executive chairman of the board,
Verso Technologies. “The benefits of this acquisition are numerous, including a
very strong and synergistic product portfolio relative to Verso’s.
Specifically, we are adding several major Tier-1 domestic customers, including
Verizon, SBC, MCI and AT&T, as well as other large international companies such
as Telefonos de Mexico and Optus of Australia. In addition, the company is
acquiring a valuable recurring revenue base from the service organization, and a
business unit that is already profitable.”
“This acquisition is strategic for Verso,” said Monty Bannerman, chief executive
officer, Verso Technologies. “We expect the Verilink business, through the
technology and customer base acquired by us, to be very accretive for Verso
shareholders. It gives us a world class managed services business with a
powerful reference account, a product portfolio that has a Tier-1 base in the
Americas and beyond, customer and distribution relationships that would have
taken years to develop, a strong north American sales team and products that we
can take to our international markets.”
“This was a win-win situation for all parties involved,” said Don Slowinski,
senior managing partner, SCS Fund, LP. “We believe SCS Fund was able to acquire
Verilink’s assets for a bargain price. The fund in turn has sold the most
strategic assets to Verso for stock, thereby becoming a significant shareholder
in the company. We believe that as a result of this transaction, there will be
considerable upside for the SCS Fund as an investor in Verso.”
In connect with the acquisition, Verso issued 2.9 million shares of common stock
and an additional number of shares of its newly designated Series C Preferred
Stock that are convertible into 2.9 million shares of common stock. The
preferred stock will convert automatically into 2.9 million shares of common
stock upon shareholder approval of an increase in the number of authorized
shares of Verso common stock, which Verso intends to propose at its next annual
meeting of shareholders, or if such proposal is not approved, then the preferred
stock converts at the option of the holder at any time thereafter to the extent
of Verso’s available shares of common stock, although Verso has agreed to
continue to seek shareholder approval to increase the number of authorized
shares of common stock to a number sufficient to permit the conversion of the
preferred stock in full. In addition, Verso will file a registration statement
to register for resale the number of shares of common stock issued in the
transaction and issuable upon conversion of the preferred stock.
Forward Looking Statements
Certain statements contained in this release that are not statements of
historical facts are "forward-looking statements" within the meaning of the
Private Securities Litigation Reform Act of 1995. The words - "believe",
"expect", "anticipate", "intend", "will", and similar expressions are examples
of words that identify forward-looking statements. Forward-looking statements
include, without limitation, statements regarding our future financial position,
timing of future orders, business strategy and expected cost savings. These
forward-looking statements are based on our current beliefs, as well as
assumptions we have made based upon information currently available to us.
These forward-looking statements may be affected by the risks and uncertainties
in our business and are qualified in their entirety by the cautionary statements
and risk factor disclosure contained in our filings with the Securities and
Exchange Commission, including our annual report on Form 10-K for the year ended
December 31, 2005. We do not assume, and expressly disclaim, any obligation to
update these forward-looking statements.
About SCS Fund LP
SCS Fund, LP. is an Atlanta-based investment partnership for institutions
and high net worth individuals. The SCS Fund focuses primarily on investments
in the small and micro-cap technology sector.
About Verso Technologies
Verso is a global technology provider of Next Generation Network solutions
offering a core-to-edge product portfolio primarily for telecommunications
service providers. Our products enable our customers to secure and optimize
network bandwidth, generate additional revenue and reduce costs. Our
applications and services are cost effective, deploy quickly and provide a
superior return on investment. For more information, contact Verso at
www.verso.com or call 678.589.3500.
Investor Contact:
Monish Bahl
Vice President, Investor Relations
Verso Technologies, Inc.
+1.678.589.3579
Monish.Bahl@verso.com
Media Relations Contact:
Christine Puleo
Director, Public Relations
Verso Technologies, Inc.
+1.786.385.8762
christine.puleo@verso.com
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