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
From The Founder
It's clear to me that the communications industry is divided into two types of people, and only one is living in the real world.
LRTV Interviews
From 4G to 5G: Alcatel-Lucent's Dave Geary

11|25|14   |   09:09   |   (1) comment


Dave Geary, President of Wireless at Alcatel-Lucent, talks about the evolution of the 4G market, small cells, partnerships, 5G and the IoT.
LRTV Huawei Video Resource Center
Building a Secure Telefonica Network With Huawei's High-End Firewall

11|24|14   |   4:37   |   (0) comments


Andrew Davies, IP architect of the Telefonica, a leading digital communications company, discusses the Huawei security gateway solution and putting the solution into the testbed.
LRTV Huawei Video Resource Center
Huawei Partners with Spirent to Verify CE12816's 10GE Port & TRILL Networking Capabilities

11|24|14   |   2:50   |   (0) comments


Spirent Communications is the world's leading supplier for telecom testing appliances and solutions. Spirent has been in a close partnership with Huawei for a long time.
LRTV Huawei Video Resource Center
Saudi Airlines & Its ICT Transformation

11|24|14   |   2:07   |   (0) comments


In this video, Saudi Airlines discusses its network problems and how Huawei's Agile Network is its all-in-one solution.
LRTV Huawei Video Resource Center
Huawei's Agile Switch Benefiting Saudi Arabia's Yamamah Hospital

11|24|14   |   2:40   |   (0) comments


Saudi Arabia's Yamamah Hospital speaks about how Huawei's Agile Switch has improved the medical service's network infrastructure.
LRTV Huawei Video Resource Center
FanPlay & Huawei Build a Wireless Agile Smart Stadium

11|24|14   |   2:13   |   (0) comments


FanPlay is a cloud-based white label service, which is effectively a football fan engagement platform underpinned by mobile payment technology.
LRTV Huawei Video Resource Center
Building an Agile Stadium

11|24|14   |   3:54   |   (0) comments


Stadiums may be thousands of tons of concrete and steel, but they now need to be agile. Being at the stadium may not be as alluring as it once was. Sports franchises and stadium operators discuss how to get fans back.
LRTV Huawei Video Resource Center
Huawei Helps ChinaCache Tackle Challenges in the Internet Industry

11|24|14   |   3:09   |   (0) comments


ChinaCache is China's largest content distribution network supplier. Huawei's CE12800 has provided ChinaCache with very strong support in its establishment of an infrastructure network.
LRTV Huawei Video Resource Center
Cefinity on Managed Security Services & Next-Generation Firewall

11|24|14   |   7:05   |   (0) comments


Cefinity is a cloud management service provider in Southeast Asia. Ivan Zhang, CEO of the company, discusses the implementation of security service management in the cloud era.
LRTV Huawei Video Resource Center
Huawei's Agile Gateway in the Eyes of Cefinity

11|24|14   |   2:11   |   (0) comments


Cefinity is a managed service provider for enterprise networks. The company currently uses Huawei's AR series routers for the most complete range of functions. CEO Ivan Zhang speaks about the advantages of the AR series routers.
LRTV Huawei Video Resource Center
CTO of Bus-Online Talks About Huawei's Agile Gateway

11|24|14   |   2:53   |   (0) comments


Bus-Online covers around 100 million users everyday. In addition to providing mobile TV, and advertising services to the public, Bus-Online has also entered the field of mobile Internet.
LRTV Huawei Video Resource Center
Amsterdam ArenA as an Agile Campus

11|24|14   |   3:31   |   (0) comments


The Amsterdam ArenA, home of the Ajax soccer team, can be a crowded space. ArenA has partnered with Huawei to work on bringing ample bandwidth to 53,000 people at the same time.
Upcoming Live Events
December 2, 2014, New York City
December 3, 2014, New York City
December 8-10, 2014, Reykjavik, Iceland
February 10, 2015, Atlanta, GA
April 14, 2015, New York City, NY
May 6, 2015, McCormick Convention Center, Chicago, IL
May 13-14, 2015, The Westin Peachtree, Atlanta, GA
June 9-10, 2015, Chicago, IL
Infographics
Irish Telecom outlines the rise of VoIP technology, including its adoption within businesses and their perception of its quality.
Hot Topics
$38.3M: Ain't That a Kik in the SMS
Sarah Reedy, Senior Editor, 11/20/2014
Do You Have a 2020 Vision?
Dennis Mendyk, Vice President of Research, Heavy Reading, 11/21/2014
Net Neutrality Even Mark Cuban Could Love
Mitch Wagner, West Coast Bureau Chief, Light Reading, 11/26/2014
$35B+ Spectrum Auction Dings Verizon, Shines Dish
Dan Jones, Mobile Editor, 11/24/2014
Operators Should Block Ads to Get Their Cut, Startup Says
Sarah Reedy, Senior Editor, 11/24/2014
Like Us on Facebook
Twitter Feed