Datafast Telecommunications has thrown a lifeline to listed Internet infrastructure service provider VivaNET with a takeover offer that includes a $500,000 loan. A spokesman for VivaNET acknowledged that the loan will enable the company to continue trading, "which it may not otherwise have been able to do".
Even though it is acknowledged that VivaNET did not have sufficient cash reserves to continue as an independent company, Kim Wood, CEO of Datafast, said he is convinced the takeover will be beneficial to his company. "The deal benefits both Datafast and VivaNET shareholders," he claimed. "As a result of the merger Datafast shareholders will acquire a business that doubles our existing revenue stream and significantly increases our customer base and geographic footprint."
In addition to the loan, VivaNET will benefit by gaining access to Datafast's voice product capability, reduced overheads, access to an increased customer base, increased skill base, the renegotiation of existing vendor finance and greater purchasing ability with other data providers, Wood added.
"Following the merger, Datafast expects to be cashflow-positive and to have funding available for customer acquisition and marketing activities," he said.
Lucent Technologies, which supplies equipment to both companies, has given the thumbs up to the deal and will continue to provide vendor financing to the merged company.