Skyvera, Lumine to battle over Casa, while Verizon watches

Skyvera and Lumine Group are set to fight over the wireless business of Casa Systems this week, with bidding to start at $20 million.

Verizon – which accounts for 80% of the revenue in Casa's wireless business – is closely watching the proceedings. Verizon uses Casa's software for its edge computing and private wireless networking offerings, and those offerings continue to play a key role in Verizon's overall growth story.

In an audio recording of a bankruptcy court meeting this week, a Verizon representative said the company is "very comfortable" with the idea of Lumine winning the Casa auction. Casa's initial bankruptcy plan, filed earlier this month, indicated that the wireless business would be sold to Lumine for $15 million.

But the Verizon representative said the company is uncomfortable with the idea of having to work with Skyvera if Skyvera wins the auction. As Light Reading previously reported, Skyvera offered a surprise $18 million bid for Casa's wireless business earlier this week. Verizon has expressed its reservations to Skyvera, according to the representative.

But Skyvera appears undeterred. A Skyvera official told the bankruptcy court that the company would move forward with the purchase of Casa's wireless operations even if it lost Verizon's business. The Skyvera representative made clear that the company is willing to go through with the deal even without Verizon's support.

The auction

Skyvera operates the telecom software companies that TelcoDR acquires. The "DR" in TelcoDR stands for Danielle Royston, the company's founder and CEO. Royston's main source of funding appears to be Joseph Liemandt's ESW Capital.

During the bankruptcy court meeting this week, a Casa representative said Skyvera had raised its bid for Casa's wireless business from $18 million to $20 million, and that the company had committed to employing more of Casa's staff than Lumine. A Lumine representative at the meeting said Lumine was considering also raising its offer to $20 million.

During the bankruptcy court meeting, officials with the companies agreed to hold an auction between Skyvera and Lumine this week for Casa's wireless business. But any resulting transaction would still need a signoff from the bankruptcy court.

The Verizon deal

Casa Systems got into the wireless industry in 2016, eventually investing $130 million into the effort. In April 2022, Verizon bought 9.9% of Casa's equity for almost $40 million.

As part of that deal, Casa agreed to provide Verizon with multi-access edge computing (MEC) services that would essentially allow enterprise customers to put a version of Verizon's core network directly onto their corporate campus. Doing so would allow Verizon to sell secure private wireless networking services coupled with on-premise edge computing functions.

"We ... had a great quarter in private networks, signing transformative deals across industries," Verizon CEO Hans Vestberg said this week during Verizon's quarterly conference call, according to Seeking Alpha. He noted that Cummins recently purchased a private network from Verizon.

But Casa struggled to gain traction beyond Verizon. By September 2023, Casa listed $262 million in assets and $316 million in debt, with Verizon and private-equity firm Summit Partners among its biggest investors.

No more funding

In January 2024, Casa sought additional funding from Verizon. 

"But the debtors and Verizon were ultimately unable to agree to terms for a broader restructuring proposal centered on a potential new money capital injection or debtor-in-possession financing," said David Zubricki, referring to Casa as the "debtor" in the company's bankruptcy filing. Zubricki is the managing director at Ducera Partners, an investment banking firm specializing in restructuring that's working with Casa.

Casa filed for bankruptcy in early April 2024. The sale of the company's wireless business is set to finance an auction of its cable business. That auction is scheduled to start in May 2024. Already Vecima Networks and Technetix have indicated interest in participating.