DragonWave preparing for new owner in Transform-X

sky (Pixabay)
DragonWave is looking for sunnier skies as a new owner is set to take over.

DragonWave is hopeful that a new owner will breathe life into the company. If all goes as planned, Transform-X will close the transaction by Oct. 20.

DragonWave announced the acquisition by Transform-X on Oct. 6, describing Transform-X as a U.S.-based privately held company with advanced waveform, software and hardware technologies to drive future evolutions in high-capacity microwave radio, satellite radio, broadcast and other RF communications.

DragonWave, which is headquartered in Ottawa, Ontario, Canada, sees the transaction as “highly synergistic” and capable of providing opportunities for DragonWave to integrate “innovative new capability” into current and future products to address critical 5G backhaul challenges.

There’s not a lot of public information about Transform-X, but the buyer has said it intends to retain substantially all of the existing employees, according to court documents (PDF).

The purchase price was not disclosed. Documents show DragonWave owes about $17.2 million, plus interest and fees, to its senior secured creditors.

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DragonWave has seen its share of troubles. A key player in backhaul for many years, the company suffered a hit in 2015 when Nokia, historically a big provider of revenue to DragonWave in the OEM channel, acquired Alcatel-Lucent, a competitor to DragonWave.  

The Ottawa Business Journal reports that the firm’s total revenues from the Nokia sales channel dropped from $84 million—more than half its total sales—in fiscal 2015 to just $11 million, or about a quarter of its total revenues, in 2017.

A court-appointed receiver took control of the company this past summer, and the company in August announced the exodus of several directors and CEO Peter Allen.

Despite that, Allen said during the company’s quarterly conference call in July that the company was operating under difficult conditions but that it was making progress. It recently had been awarded a product supply and installation services contract from SmartSky Networks, a North American 4G LTE in-flight service provider.

Asked specifically about Sprint, Allen said the initial ramp of an upgrade with DragonWave product was a little bit slower than expected but that the opportunity was “undiminished,” according to a Seeking Alpha transcript.

DragonWave also was a key supplier to Clearwire, which was rolled into Sprint in 2013.

Last year, DragonWave was a Fierce Innovation Award winner in the category of Rural Wireless Networks for its Harmony Enhance MultiChannel (MC) product, which is designed to provide high bandwidth rural connectivity in a cost-effective manner.