"Home prices driving tech workers overseas"
A potential lifeline deal with Dell hit snags.
Sources inform ''Globes'' that the board of clustered NAS systems start-up Exanet Inc. has decided to close the company in a few days, after the company failed to raise capital to stay in business. The company's 80 employees, 60 of them in Israel, will be fired.
Big names are behind Exanet, including co-founder and chairman Dr. Giora Yaron, and Eitan Wertheimer, one of the first investors in the company.
Exanet's closure is not an ordinary company failure. The sources said that the company had one alternative to closing down: a $20 million investment led by Dell Inc. (Nasdaq: DELL) and a cooperation agreement with the computer giant. A deal would have allowed the company to survive for the foreseeable future.
However, the pending deal was torpedoed by some of Exanet's current investors, sealing the company's fate, unless there is a sudden change in its fortunes. Exanet was founded in 2000. Its investors include Eitan Wertheimer's Microdent Ltd., Evergreen Venture Partners, Coral Group, and LTG Development Capital.
Yaron is not taking failure as a foregone conclusion. "Nothing like this has ever happened to me," he told "Globes" today. "This is something that happens once in a lifetime, and I that that will be enough for me. But you can't live in this industry without such things happening, unfortunately. We found ourselves in a situation that needed a lot of money, and that's terribly hard to raise in times like these."
The deal with Dell that fell through could have been a springboard for Exanet's business. The deal would have reportedly been one of the largest deals in the storage sector in the past year, and would have enabled Exanet to boost sales and even reach profitability.
"Globes": What went wrong?
Yaron: "We didn't manage to agree on everything surrounding the agreement, all the loose ends."
Yaron's response gives the formal side of the behind-the-scenes developments. The negotiations between Exanet and Dell went on for a long time, and included an OEM deal. Sources close to Exanet claim that some of its investors opposed the agreement, and preferred to close the company and to try to sell its intellectual property, rather than see their holdings diluted.
Unless Exanet obtains a last-minute capital injection, it will go into liquidation, in which the investors may be able to sell part of its activity. Last week, president and CEO Mark Weiner convened the company's employees and told them that November salaries would be paid a day late. The company will have a few million dollars in sales in 2009, which is insufficient to achieve an operating profit.
Published by Globes [online], Israel business news - www.globes-online.com - on December 6, 2009
© Copyright of Globes Publisher Itonut (1983) Ltd. 2009
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