Light Reading
A week after a massive layoff, Tachion is trying to raise money and reinvent itself

Tachion Trolls for Cash

Light Reading
News Analysis
Light Reading
6/26/2001
50%
50%

Tachion Networks is trying to give its pallbearers the slip.

Since it fired most of its employees last week, the company is trying to morph itself into a smaller company with less lofty product plans than it had last year (see Crunch Time at Tachion). Its CEO, Jeff Matros, told a New Jersey newspaper over the weekend that if it doesn't raise $20 million in new funding by July 6, the company will shut down.

This dash for cash marks the second major restart for Tachion. The first happened during fall 2000 when the company realized its product launch was delayed and an initial public offering was much farther away than it had hoped.

This time, though, Tachion isn’t just resetting its goals. Instead, sources say, Tachion is recapitalizing itself -- changing its capital structure to give some of its early investors an alternative exit strategy. It is also mulling a name change for the recapitalized firm.

To pull this off, Tachion appears to be raising what's known in venture capital circles as a “washout” financing round, also called a “pay-to-play" round. A washout round is a financing round done at a lower valuation that is designed to separate those investors that don’t want to support the firm any longer from those that do.

If Tachion completes a washout round, each investor's ownership in the company will be significantly diluted, unless they decide to chip in for the $20 million round. The company’s management structure would probably stay the same, though it may lose any board members tied to investors that decide to bow out.

Whatever its investors decide, Tachion has already picked a name for its reemergence. According to sources, the company wants to call itself Phoenix Network Systems Inc. (Rising from the ashes, get it?) On June 18, Tachion registered the domain name www.phoenixnsinc.com, according to data from Network Solutions. The Tachion employee who registered the name, Steven Ferrino, tells Light Reading he didn't know what Phoenix Network Systems' relationship would be to Tachion. "I was just following orders," he says.

Now that it's somewhat clear how Tachion is trying to press on, last week's actions make more sense. At that time, Tachion told its fired employees that it was shutting down operations, but then reversed that stance when approached by Light Reading. It's possible, of course, that Tachion might shut down. But its also likely the firm could continue after it makes some significant cosmetic changes.

This leaves one big question: Are investors willing to keep Tachion alive, given the fact that it has raised $85 million in funding since 1996 and has never shipped a commercial product?

Among those pondering that question are Lehman Brothers Venture Capital Group, Goldman Sachs & Co., LightYear Communications, J.P. Morgan & Co., Morgenthaler Ventures, Walden International Investment Group, WaldenVC, Singapore's EDB Investments, and Clark McLeod, Chairman of McLeodUSA (Nasdaq: MCLD).

Tachion’s board members include its CEO Jeff Matros, McLeodUSA director Roy A. Wilkens, and Mike Odrich, Managing Director and Head of Lehman Brothers' Private Equity Division.

Tachion did not return calls. Nor did Wilkens, Odrich, or representatives from Walden International.

- Phil Harvey, Senior Editor, Light Reading
http://www.lightreading.com

(1)  | 
Comment  | 
Print  | 
Newest First  |  Oldest First  |  Threaded View
firstmiler
50%
50%
firstmiler,
User Rank: Light Beer
3/7/2014 | 12:52:49 PM
where did the thread go?
I thought this was part of our industry historical archive... did it just vanish?
Flash Poll
LRTV Huawei Video Resource Center
Sales Director of INIT on Plug & Play Switch Devices

9|19|14   |   3:21   |   (0) comments


INIT Italy uses both the Huawei S5700 and S7700 series switches for the campus LAN environment. Sales Director Andrea Curti says their company chose these Huawei devices over others because of their performance, flexible scalability and plug-and-play features.
LRTV Huawei Video Resource Center
Saudi Arabia Upgrades Vocational Training System

9|19|14   |   3:31   |   (0) comments


The Technical and Vocational Training Corporation (TVTC) has 100,000 students, 150 government-owned institutions and oversees 1000 private institutes. The CIO of TVTC explains that Huawei devices have allowed them to manage multiple datacenters using just one software program, scientifically tracking the progress of students and teachers, saving them millions.
LRTV Huawei Video Resource Center
Huawei's Media Solutions Are Here to Stay

9|19|14   |   4:35   |   (0) comments


The current media revolution requires rapid upgrades in technology. New formats (HD, 3D, 4K etc.) and the subsequent explosion of file sizes demand sophisticated network and storage architecture. Social media and the multiple distribution channels require a robust asset management system. Gartner analyst Venecia Liu speaks about the current technological trends in ...
LRTV Huawei Video Resource Center
Microgenesis on Huawei's Switches

9|19|14   |   3:57   |   (0) comments


Microgenesis is a solutions and system integrator company in the Philippines whose areas of expertise include data centers, networking and security products. In this video, Executive Director Jeffrey Choa talks to us about his customers needs and they benefit from using Huawei switches.
LRTV Huawei Video Resource Center
Network Solutions Help the Philippines Jump Ahead

9|17|14   |   2:59   |   (0) comments


In the past, the Philippines has under-invested in technology. Now, the CEO of Softshell talks about how Huawei products help the Philippines jump ahead as the economy improves.
LRTV Huawei Video Resource Center
VCS Observation for Safer Cities in the Netherlands

9|17|14   |   5:20   |   (0) comments


Holland's VCS Observation has been operating for 22 years. Its main goal is to get cities safer. CEO Wim van Deijzen tells us some of the challenges his company faces and how Huawei is helping to overcome these challenges.
LRTV Huawei Video Resource Center
A Conversation With Serbia's Ministry of Interior

9|17|14   |   4:38   |   (0) comments


At HCC 2014, the Assistant Minister of the Ministry of Interior of the Republic of Serbia talks to us about his projects and corporation with Huawei. Solutions like Safe City and E-Government and services like cloud computing are just some of the areas his department is interested in.
LRTV Huawei Video Resource Center
IHS Analyst Discusses eLTE at CCW 2014

9|10|14   |   7:09   |   (0) comments


Thomas Lynch, associate director of critical communications at IHS Technology, talks about broadband in critical communications.
LRTV Huawei Video Resource Center
TCAA on Huawei eLTE: A Broadband Solution for Mission-Critical Communications

9|10|14   |   2:29   |   (0) comments


At CCW2014 in Singapore, the TCCA's Phil Kidner talks about the importance of broadband data for critical communications.
LRTV Custom TV
Spotlight on Cisco: SDN for Optical Networks

9|8|14   |   9:27   |   (0) comments


Cisco's Greg Nehib talks OpenFlow and more on the 'Software-Defined Networking for Optical Networks' panel at the Big Telecom Event in June 2014.
LRTV Custom TV
Cisco's Evolved Programmable Network (EPN)

9|8|14   |   4:05   |   (0) comments


A look at the various demos Cisco showed at Light Reading's Big Telecom Event highlighting Cisco's EPN innovation and how SDN and NFV technologies are enabling a variety of new services.
LRTV Huawei Video Resource Center
The Future of Ultra-Broadband, With Kevin Kelly (UBBF2014)

9|5|14   |   1:13   |   (1) comment


If you think the technological changes we've seen up to now are astounding, just wait until you see what the future has in store. Discuss upcoming breakthroughs with Kevin Kelly, Founding Executive Editor of Wired Magazine, at the Huawei Ultra-Broadband Forum on September 24.
Upcoming Live Events
October 29, 2014, New York City
November 6, 2014, Santa Clara
November 11, 2014, Atlanta, GA
December 2, 2014, New York City
December 3, 2014, New York City
December 9-10, 2014, Reykjavik, Iceland
June 9-10, 2015, Chicago, IL
Infographics
A survey conducted by Vasona Networks suggests that 72% of mobile users expect good performance all the time, and they'll blame the network operator when it's not up to par.
Today's Cartoon
Vacation Special Caption Competition Click Here
Latest Comment
Hot Topics
Photos: Qualcomm Takes Over San Francisco
Sarah Reedy, Senior Editor, 9/19/2014
Exclusive: Microwave Maven Exalt Is Cooked
Dan Jones, Mobile Editor, 9/22/2014
NFV & The Data Center: Top 10 Takeaways
Sarah Reedy, Senior Editor, 9/18/2014
EMC Mulls Merger With HP or Dell – Reports
Mitch Wagner, West Coast Bureau Chief, Light Reading, 9/22/2014
Pics: LR's Women in Telecom Breakfast
Sarah Reedy, Senior Editor, 9/16/2014
Like Us on Facebook
Twitter Feed