Cor Cordis Secures Future for NetComm with DZS Inc. Deal
Cor Cordis is pleased to announce the successful acquisition of NetComm by DZS Inc., a NASDAQ-listed U.S. company.
On 11 March 2024, Kate Conneely and Rahul Goyal, Partners of Cor Cordis were appointed Administrators of NetComm and its related entities after several failed attempts to sell the business.
Recognising the inherent value of NetComm’s ongoing operations, the Administrators decided to continue trading while actively seeking a buyer. Confronted with significant working capital requirements and the risk of incurring substantial employee entitlement claims, Cor Cordis leveraged the pre-appointment sale process to secure an effective resolution for NetComm. Additionally, NetComm’s parent company faced financial challenges and was subject to Chapter 11 Bankruptcy proceedings in the United States, further necessitating a rapid and decisive course of action.
"We were comfortable that a comprehensive sale process had already been conducted, making it unnecessary and impractical to commence a fresh process," said Kate Conneely. "We engaged directly with the two parties who had previously expressed interest and provided non-binding offers, working collaboratively to secure binding bids."
On May 3, 2024, Cor Cordis orchestrated the execution of a share purchase agreement between NetComm’s parent and DZS Inc., with the transaction completed on May 31, 2024. Key outcomes of the sale included:
- Execution of three inter-conditional deeds of company arrangement, enabling DZS to acquire the shares in NetComm to emerge from administration free of liabilities.
- A negotiated fixed return to secured lenders (owed more than USD188m) to facilitate enhanced distributions to unsecured creditors.
- Maintaining operations in Australia, New Zealand, the UK, Canada, and the USA including continuing the employment of over 100 employees in those countries.
- Replacement of cash-banked guarantees and honouring all purchase orders entered into by the Administrators.
- Working with various counterparties affected by change in control clauses and the continuation of all after sales and warranty provisions by the purchaser.
- All employees affected by the restructure to receive their full entitlements.
- Unsecured creditors receiving a substantial return.
Cor Cordis acknowledges the collaborative efforts of its legal advisors, Arnold Bloch Leibler, led by Stephen Lloyd, Gavin Hammerschlag, Jessica Ortner, and Elissa Raines. The dedication of the NetComm management team and staff were instrumental in achieving this successful outcome, working around the clock alongside the Cor Cordis and the ABL teams.
"It’s been a pleasure to work with the NetComm team and work alongside them to achieve the sale to DZS," added Rahul Goyal. "In the absence of financial support from the lenders and the parent company, suppliers and customers stepped up by providing the financial support needed to get the deal done. We are ecstatic with the outcome as the alternate provided no return to creditors and a shortfall to employees. With everyone playing their part, this demonstrates how a voluntary administration, when used correctly, is a highly effective restructuring tool."
NetComm’s parent was advised by Alvarez & Marsal, Ash Street Partners and Sidley Austin, its lenders advised by FTI, Akin Gump and Ashurst, and DZS Inc. was advised by Bowen Inc and Baker McKenzie.
For media enquiries
Lidia Bufalino, National Marketing Director, Email: lbufalino@corcordis.com.au
About Cor Cordis
Cor Cordis is one of Australia's leading business advisory firms. We provide innovative and effective solutions to complex financial challenges. Our experienced professionals are dedicated to delivering optimal outcomes for our clients across various industries.
About NetComm
NetComm is a leading global provider of telecommunications solutions, with operations in Australia, New Zealand, the UK, and the USA. Known for its innovative technology and commitment to quality, NetComm continues to drive connectivity and communication advancements worldwide.
About DZS Inc.
DZS Inc. (NASDAQ: DZSI) is a global leader in network access solutions, delivering cutting-edge technologies that enable high-performance networks. Focusing on innovation and customer satisfaction, DZS Inc. provides comprehensive solutions to service providers and enterprises around the world.
