Struggling telco firm sheds assets to US buyer

North Sydney-headquartered operational support systems vendor Clarity OSS has announced the sale of its assets to the Australian subsidiary of an unnamed US buyer.

The acquisition was initiated by the secured creditors chairman Dr Ian Campbell and his company CPS, according to a statement to the ASX.

Campbell and CPS had provided $26 million to support Clarity and had later forgiven $14.5 million of that debt as the company endured troubled times. Later, another $1.5 million was advanced by Dr Campbell to service Clarity's other debts and costs.

The statement said that a few months ago CPS had exhausted its capacity to support Clarity. That precipitated negotiations with potential buyers.

"Despite Dr Campbell's ongoing support, the company continued to suffer financial difficulties to the extent that, with CPS and Dr Campbell no longer having the capacity to support the company, the appointment of an administrator or liquidator was a real possibility," said Clarity's announcement.

Campbell informed Clarity on 23 June that a buyer had been found for CPS' secured assets. Clarity's board then agreed to join the sale by offering up assets that were not part of CPS' security.

"Dr Campbell pointed out that this was the best offer the company had received after many months of offering the assets to the market," said the ASX statement.

"If it were not accepted and if the sale were not completed in… no more than a week, the company would likely be placed in administration or liquidation, in which case the shareholders were unlikely to received any of the proceeds of any future sale."

The sale is to be completed within the next two weeks and does not include assets in regions where "the buyer does not propose to carry on business". Clarity has overseas offices in Malaysia, Indonesia, Philippines, Singapore, India, UK and Bulgaria.

CRN contacted Clarity's Australian office to enquire which of the regions are included in the sale, but had not received a response at the time of writing.

In November, CRN reported that the vendor cut more than 20 percent of its head count, blaming its poor performance on the cost of doing business in Australia. The company then reported a net loss of $4.9 million for the half year ending 31 December 2013.