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Forgent Plans to Sell VTEL Products Business Unit in Management Buyout

June 11, 2001

This post is filed under: New Economy.
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ForgentINTO Corporation has entered into a letter of intent to sell certain assets of its VTEL Products business unit, including the VTEL name, to the management of its VTEL Products business unit. The management team is led by General Manager Bob Swem.

The transaction is subject to the execution of definitive agreements, stockholder apppriate financing; this process is underway.

  • Forgent will retain the existing service contracts with the VTEL Products business unit, which are anticipated to amount to more than $10 million in revenue.

  • Forgent will retain a 19.9% common stock interest in the acquisition entity (the $2 million in equity mentioned above) and a seat on its board of directors.

  • Forgent will retain the portfolio of 30 patents VTEL has been assigned since its inception, and all rights to license those technologies.

  • The VTEL Products business unit will subcontract exclusively with Forgent to provide maintenance services for VTEL products. This arrangement will allow Forgent to maintain services revenue, while enabling the VTEL Products business unit to continue to provide high quality service through its existing reseller channels, while maximizing convenience for existing customers.

  • The VTEL Products business unit anticipates continuing to sell products worldwide through existing reseller channels and will also retain the China Wholly Owned Foreign Enterprise (WOFE).

    “This is a win-win for everyone,” explained Dick Snyder, chairman and chief executive officer of Forgent. “Customers and resellers of VTEL’s Products business unit are assured that the quality of products and high standards of service they have come to expect from VTEL will continue uninterrupted. The talented employees of this division will continue to work with and for a management team they know and trust. As an industry member of Forgent’s Multi-Vendor Partner Program, Forgent will continue to sell VTEL products to its customers. And this enables Forgent to focus on its core competencies: providing services and multi-vendor products to Fortune 2000 companies, improving industry wide multi-vendor platform interoperability and the integration and management of visual communications networks.”

    VTEL Products Business Unit Performance Improvement

    “Since the formation of the VTEL Products business unit six months ago, there has been a meaningful improvement in the performance of the VTEL Products business unit, and I expect that improvement to accelerate as we conclude the purchase of the division,” stated Swem. “We have retained and hired talented engineers who have been instrumental in continuing to improve our core Galaxy product line and who will work to extend the Galaxy product line into higher growth markets. As evidence of the VTEL products’ improved performance, numerous customers, including the education networks of Ohio, Texas, Oregon, and other states, have added significantly to their existing Galaxy-based networks. These recent product improvements, combined with VTEL’s proven world-wide leadership and experience in H.323 videoconferencing networks, uniquely position VTEL for success going forward,” Swem concluded.

    ArticuLearn Will Be Closed

    In another move to focus on its core competencies and reduce cash outlay, Forgent plans to close ArticuLearn by June 30, 2001. Vigorous attempts to secure venture capital for the 18-month old e-learning portal were unsuccessful. The action will cause no material one-time charges and provide Forgent an estimated annual savings of $4 million.

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