Divestitures are a way for a company to manage its portfolio
of assets. As companies grow, they may find they are trying to focus on too
many lines of business and that they must close some operational business units
in order to focus on more profitable lines. This is a problem that
conglomerates may face. Companies may also sell off business lines if they are
under financial duress. For example, an automobile manufacturer that sees a
significant and prolonged drop in competitiveness may sell off its financing
division in order to pay for the development of a new line of vehicles.
Elephant Talk Communications Corp. (NYSE MKT: ETAK) announced, in a press
release, an update on its divestiture of wholly-owned subsidiary, ValidSoft
Limited (together with its wholly-owned subsidiary ValidSoft Limited UK,
“ValidSoft”).
On March 22, 2016, Elephant Talk provided Cross River
Initiatives LLC with a notice of default on the binding letter agreement dated
February 17, 2016, between Cross River and the company concerning the proposed
purchase of ValidSoft and governing certain important matters relating to the
interim financing of ValidSoft’s business and operations. While Elephant Talk
will not totally foreclose consummating the ValidSoft sale transaction with
Cross River as originally contemplated, the company will no longer give
preference or exclusivity to the buyer. The Elephant Talk team is working with
an investment bank to evaluate strategic options regarding the planned
divestiture of ValidSoft.
Hal Turner, executive chairman of the board of Elephant
Talk, commented in a press release, “While we continue to have ongoing
discussions with Cross River concerning the proposed purchase of ValidSoft, in
the best interest of our shareholders, we cannot extend Cross River preference
or exclusivity. We are working with an investment bank to evaluate strategic
alternatives for the asset and remain optimistic that a transaction will be
consummated in line with the company’s stated restructuring activities. Despite
the setback in the divestiture of ValidSoft, the company’s restructuring plan
is otherwise progressing on track and further details will be forthcoming on
our earnings release and conference call later this month.”
Elephant Talk has developed a proprietary software and
telecoms platform to provide cloud-based mobile network solutions to
communications services providers (MNOs, MVNOs); enterprise and
government/education organizations; and application/content and retail
providers.
ValidSoft secures transactions using personal authentication
and device assurance. ValidSoft enables its customers to enhance their security
while improving their user experience, utilizing its multi-factor
authentication platform, Voice Biometric engine and Device Trust technology,
all of which may be used as ‘stand-alone’ services or integrated into
multi-vendor solutions. ValidSoft serves multiple clients across the financial
services, government and enterprise sectors and is the only company to have
been granted four European Privacy Seals, reflecting its commitment to strong
data privacy.
For more information, visit the company’s website:
www.elephanttalk.com
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