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[December 12, 2010]
Formula Telecom sells US unit to Paetec for $13m
Dec 12, 2010 (Globes - McClatchy-Tribune Information Services via COMTEX) -- Formula Vision Technologies Ltd. (TASE: FVT) subsidiary Formula Telecom Solutions Ltd. (AIM:FTS) has sold its US subsidiary Formula Telecom Solutions Inc. to Paetec Holding Corp. (Nasdaq: PAET) subsidiary Paetec Software Corporation for $13 million in cash.
FTS develops billing, customer care and policy control solutions for communications and content service providers. Paetec is a US communications carrier that provides voice and data solutions to business-class customers, and has used FTS's Leap RevChain billing platform since its inception in 1998. The Leap RevChain billing system will be the heart of the new RevChain Solutions division of Paetec Software.
FTS Inc. is based on Viziqor Solutions Inc., which FTS acquired in 2005 for $2 million. The sale means that FTS increased the value of the unit more than six-fold. Boca Raton, Florida-based FTS Inc. has 40 employees, who will join Paetec Software.
FTS's share price closed on London's Alternative Investment Market (AIM) at UKpound0.235 on Friday, giving a market cap of UKpound7.7 million. The share price has fallen 24 percent this year, and its current market is roughly equal to the sale price of FTS Inc.
The sale of FTS Inc. will boost FTS's balance sheet, which totaled $5.3 million at the end of June. FTS posted $10.4 million revenue in the first half of 2010, 5.4 percent more than in the first half of 2009, but its net loss widened to $2.1 million, mainly because of higher financing and tax expenses. The company posted an operating profit of $79,000 in the first half, compared with an operating loss of $31,000 in the first half of last year.
FTS's North American operations were its most lucrative, amounting to $4.4 million in the first half, and generating a pretax profit of $1.4 million. FTS's operations elsewhere in the world are not yet profitable.
Formula Vision owns 44.6 percent of FTS, and FTS CEO Amos Sivan owns 14.8 percent.
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