Tennyson Networks has made an about turn on intentions to sell its core business after securing $10 million in funding.
The Melbourne-based company is best known for its Smart Office eXchange (SOX) telephone system but had been in negotiations for several months with parties interested in buying those operations following its acquisition of a broadband business from Ericsson New Zealand.
Tennyson announced in April it had paid $1.4 million for Ericsson Data Services (EDS) and would be looking to sell SOX. It has since given EDS the new name of Datareach.
Acting CEO for Tennyson, Rick Pullia, described Datareach as a broadband business that designs, develops and markets a range of Internet communication products.
He said these products are manufactured and sold in Poland.
“When Datareach was owned by Ericsson it was restricted to one market [Poland] because of internal marketing policies,” Pullia said. “Eastern European markets are similar so the business case for Poland will apply to other markets in the region.”
Tennyson has now reached an agreement with another Melbourne-based company, Neoside. Subject to shareholder approval at a meeting in September, Neoside will be issued with more than 391 million shares in Tennyson, worth a total of almost $9.8 million.
This will make Neoside a 70 per cent shareholder in Tennyson, with Neoside representatives John Fletcher and Geoffrey Rubython joining the Tennyson board of directors. It is not yet clear in what capacity.
Pullia refuted claims that Neoside had insisted on keeping hold of the SOX business.
An ASX release said that “it became clear there were major benefits for all parties if Tennyson retained SOX as well as gaining additional funding, complimentary technology and expertise to develop the product range while also expanding the Datareach business”.
Tennyson also announced it has issued 8.96 million shares to private investors to raise $224,000.
Ronald Woss, who was the largest shareholder, has retired from the board.
Tennyson exports its SOX products to New Zealand as well as the UK and will now look for further export opportunities. Back in 2001, it voluntarily halted trading on ASX after an ill-timed overseas expansion strategy saw it fall victim to the dotcom crash.