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Casa Systems has filed for Chapter 11 bankruptcy
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A company representative said a drop in industry demand and investments made in new product offerings made the company's debt level unsustainable
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Casa inked deals to sell its 5G core and RAN assets to Lumine and cable business to Vecima Networks
The tables seem to have turned rather dramatically for Casa Systems. Or perhaps they were never upright to begin with.
After CEO Michael Glickman spent months pitching the company’s turnaround story – which included plans to sell off non-core assets and dramatically grow its cloud business – the company filed for Chapter 11 bankruptcy and announced plans to sell off its 5G core, RAN and cable assets.
Glickman said the move was a last resort in the face of contracting demand in the cable and wireless markets.
“Like many in our sector, Casa has experienced a significant decline in revenue and profits due in large part to industry-wide downward capital investment and procurement trends in the cable and telco markets,” he stated. “We believe the sales of our businesses through a Chapter 11 process will maximize value, preserve jobs and minimize disruption for our customers.”
Silverlinings pressed a company representative to explain what changed in the time since we last spoke with Glickman about the company’s strategy.
The representative said the decline in demand mentioned above, coupled with investments the company made to bring its 5G core and RAN products to market “made our debt levels unsustainable and collapsed the time we had to execute on the new company strategy we laid out six months ago.”
According to its bankruptcy filing, Casa has an estimated 1,000 to 5,000 creditors and between $100 million and $500 million in assets. But it also has an estimated $100 million to $500 million in liabilities.
Summit Partners holds a 35.6% stake in Casa Systems while Verizon Communications holds a 10% stake, though it should be noted neither equity partner appears on the list of Casa's creditors.
Asked whether there will be layoffs during the bankruptcy process, the representative said Casa’s “operations will continue as normal” throughout the bankruptcy court proceedings.
Asset sales
Software company Lumine Group, which recently scooped up Nokia’s Device Management (DM) and Service Management Platform (SMP) businesses, struck a deal to acquire Casa’s 5G Mobile Core and RAN businesses. Casa’s Access & Mobility Management, Session Management, User Plane, Network Repository and Network Slicing assets, as well as its 4G/5G Security Gateway and 4G/5G and Access Femto Small Cell Devices are all included in the deal.
Lumine president Tony Garcia said in a statement the assets will be a “welcomed addition” to the company’s signalling and security portfolio. Following the deal’s close, “this business unit will be launched under its own brand identity and expanded heritage product name, to clearly distinguish its product offerings and serve the global 5G cloud native core and access markets,” he added.
Casa has asked the bankruptcy court to approve its Lumine deal by the end of April.
Additionally, Vecima Networks has placed a $20 million bid for Casa’s cable assets, which include its virtual broadband network gateway and content delivery software and services. The Casa representative told Silverlinings it has “asked the court to approve procedures for soliciting additional bids and to set an auction [for the cable assets] for mid-May.”
Casa said it’s hoping to use the proceeds from the sales to fund business as usual while it works its way through the bankruptcy process.
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