Investors vie for Opto Speed assets

Opto Speed develops and manufactures optical components (RWTH Aachen) swissinfo.ch

Negotiations for the assets of eight-year-old Opto Speed are underway in Rüschlikon, and a decision is expected any day now.

Those vying for control are primarily former managers of the firm.

“Customers of Opto Speed are urgently awaiting the delivery of a verdict and so creditors have arranged for an attorney to manage a solution as quickly as possible,” says the local authority, the notary public in Thalwil.

The firm makes lasers, super-bright light emitting diodes, and photoreceivers used in optical networking equipment.

Opto Speed filed for bankruptcy last month. At its peak it generated revenues of some SFr20 million ($14.1 million) and employed 120 people. It was down to about 50 by the time the doors shut a few weeks ago.

A hard bargain

The investors, The Carlyle Group and ABN AMRO, stopped providing capital, which led to a liquidity crisis and bankruptcy, according to Sabine Wetzel, the former personnel manager quoted in Light Reading, a trade publication.

The two private equity firms had agreed to stump up more than SFr42.54 million ($30 million) in venture capital just last year, driving a hard bargain with Opto Speed. Venture capital industry insiders told Swiss Venture earlier this year that Dell Ara made the fatal mistake of deciding to increase production capacity as revenues started to plummet.

After local and European venture investors were rejected by Dell Ara, Carlyle Capital’s European Venture Fund stepped in at the last minute.

From all accounts the US-based private equity firm with a penchant for appointing ex-presidents, ex-army generals, oil sheikhs, and former English prime ministers to its board, took a large chunk of the equity from existing investors, diluting their shares and taking control of the company. Almost immediately upon signing, Dell Ara resigned.

Opto Speed’s market failed to grow at the speed anticipated in the boom of the late nineties. Demand for telecommunication components has fallen to 1997 levels, instead of increasing each year since 2000.

“The telecoms sector is certainly not dead,” says Karsten Michelmann, venture capital investment manager at DEWB, a German-based investment company specialised in optical technologies. “People are still buying — just not at the same rate as it was in 2000,” points out Michelmann.

The fate of Opto Speed is an all too common occurrence among privately owned firms in the sector, added the German VC fund manager.

Jorg Wieland, CEO and co-founder of Helix AG in Zurich said that at least fifty per cent of the firms in the optical component business around the world have failed during the past few years.

Vultures circle

There are at least three parties with conflicting business plans poised to acquire Opto Speed’s assets – mainly former managers.

One potential acquirer is thought to be Albis Optoelectronics, a recently established firm with Markus Blaser, the former product manager of the photodetector business, at its head.

Another is Avalon Photonics, which is mentioned by Wetzel in the Light Reading report.

Swiss Venture contacted Avalon’s CEO, Heinz Meier, who replied in an email that consolidation of complementary technologies “certainly makes sense”, but that at this point in time an acquisition acquiring the assets of the other firm “is not on top of the respective priority lists”.

He did say that Avalon has an open dialog with “some former key employees” of Optospeed.

The product line manager for the SLED products is also in the bidding process. Even Peter Heywood, editor and co-founder of Light Reading magazine, made the surprising offer to help former employees find investors to fund any new startup companies based on Opto Speed’s assets.

One person who will not be part of the discussion in a big way is the firm’s founder, Roberto Dell Ara. Swiss newspapers say that the founder who was ousted shortly after Carlyle invested, is not in the running to acquire assets.

He was quoted as saying that he has “already lost enough sleep over Opto Speed” and now has his mind set on a new venture which he is not yet divulging to the public.

swissinfo, Valerie Thompson