IEC may take control of fiber optic venture

Danny Lauber
Danny Lauber

Unlimited CEO Danny Lauber has stepped down under pressure from the Israel Electric Corp.

Fiber-optic venture Unlimited CEO Danny Lauber has been forced to resign. The company's shareholders and especially Israel Electric Corporation (IEC) (TASE: ELEC.B22) chairman Yiftach Ron-Tal and CEO Ofer Bloch have made it clear to Lauber that they do not see him as the man to lead the company.

Shareholders of Unlimited, the Israeli fiber optics venture, convened Thursday in Tel Aviv to discuss the company’s future. The shareholders were presented with an accelerated roll-out plan and customer acquisition, but were also informed the venture faced a severe shortage of funds.

They were told the venture could not be saved without a quick injection of hundreds of millions of shekels. At the end of the session it was decided to hold another shareholder meeting next week to receive a clearer indication of whether they were willing to undertake further investment.

The decision will largely rest on Cisco (which provides supplier funding and operates through Via Europa) and IEC, which hold the most significant stock in the venture. The Israeli partners, for their part, hold relatively few shares and their injection will not save the company and they are unlikely to agree regardless.

The approval for supplier funding from Cisco is still tenuous as the move requires the agreement of global Cisco and separate sources have said senior executives in Cisco Israel expressed positions behind closed doors that suggest they are concerned about the venture’s future.

Shareholders believe the question for Cisco is not purely financial there is a wider significant to its failure, which has been in part an experiment for Cisco. It must be noted that Cisco must agree to defer payments it is owed, leaving it unclear as to how it would proceed.

Via Europa, on the other, announced at Thursday’s session that it did not intend to inject any additional funding.

The matter also poses a problem for the IEC, which requires government approval for the injection an arduous process with an uncertain finale. However, like Cisco, it is only supplier funding. For the IEC, this could be an opportunity to take control of the venture as the radical changes the company would undergo in the case of an injection would lead to changes in the control structure.

For the moment, the meetings suggest the venture is facing a difficult obstacle of cash flow and its survival is contingent on the quick influx of hundreds of millions of shekels. It is further evident the shareholders demand a change in the company’s leadership a topic that will soon be discussed.

Published by Globes [online], Israel business news - www.globes-online.com - on January 10, 2016

© Copyright of Globes Publisher Itonut (1983) Ltd. 2016

Danny Lauber
Danny Lauber
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