Sources inform “Globes” that Teledata (formerly ADC Israel) is negotiating with Elron Electronic Industries (Nasdaq: ELRN; TASE: ELRN) and other companies to raise $5-15 million, at a company value of $60 million.
Kardan NV (TASE: KRNV;AEX: KARD) acquired control of Teledata last year for a nominal sum. Teledata reportedly wants to use the private placement for an issue on Wall Street at the end of the year at a much higher company value.
Teledata develops and manufactures innovate access products and network solutions for communications switchboards. Teledata was listed on Wall Street when it was controlled by Polar Investments (TASE: PLR). ADC Telecommunications (Nadsaq:ADCT) acquired full ownership of Teledata in late 1998 for $200 million, and delisted it.
In early 2004, Kardan acquired 50.01% of the company. The rest of the shares are held by Teledata's management and employees. ADC has a five-year option to acquire 15% of the company through an allocation of shares. Under the agreement, Teledata promised to pay ADC $4 million within two years from the closing of the deal. This amount, guaranteed by Kardan, now constitutes the liquid guarantee Teledata has provided the banks.
Teledata also promised to pay ADC 2.2% of its annual sales turnover, or a minimum of $1.1 million a year, for five years, provided Teledata's sales exceed $50 million a year. So far as is known, current sales are about $40 million a year.
When it was a subsidiary of ADC, Teledata was forced to undergo extreme downsizing, which included laying off over 200 employees and closing production lines. Teledata currently has 140 employees.
Published by Globes [online], Israel business news - www.globes.co.il - on February 1, 2005