Did Founders Profit on Zhone Loans?
When the merger between Zhone Technologies Inc. and Tellium Inc. was finalized today (see Zhone Gets a Symbol (and Layoffs)), Zhone's founders, Mory Ejabat and Jeanette Symons may have collected on some high-interest short-term loans they made to their own company.
Ejabat and Symons loaned Zhone a total of $4 million between July and August 2003, according to Zhone's SEC filings. The loans were made presumably to help the company's cash position. In the end, though, the loans could have ended up helping Symons and Ejabat's cash position, too.
Each loan carried an interest rate of 12 percent a year, at a time when short-term rates are at historic lows. The loans were to mature on either December 31 or on the day that Zhone closed its merger with Tellium, whichever came first. The way the loan was structured, Ejabat and Symons both participated in the first $2 million installment and Symons loaned the second $2 million.
It's not clear exactly how much Symons and Ejabat made on interest from the loans. Assuming the 12 percent annual interest was paid for the period they held the loan -- about 4 months -- they could have earned about $160,000 in interest between them. The information on how much interest they have been paid on the loans has not yet been disclosed.
Zhone declined to comment beyond what was already disclosed in the SEC filings.
— Phil Harvey, Senior Editor, Light Reading
>ever smooth sailing... At the time, everything >seems like a major hurdle... However, over time, >the history changes itself and in hindsight, it >was all smooth sailing.
There is wonderful irony in the phrase "history
changes itself".
>When I look at a lot of the people that I work >with or run into in business, there are just too >many differences between myself and them to >consider them role models
I can think of a few:
- Lucreza Borgia
- Jiang Qing (Mao's wife)
- Lynette "Squeaky" Fromme
>I think the best business advice I ever received >was probably to LISTEN -Sounds stupid - but as >we grow a company, it is really easy to begin to >believe that you know best... The most important >thing to remember is that all sorts of people >and other companies know more about what they do >than you do... Gotta listen to everyone....
That one kind of speaks for itself.