High Wire Networks, a global managed cybersecurity provider, sold its technology enablement services business to technology infrastructure services firm ServicePoint, in an all-cash deal.
High Wire’s board of directors also approved the holding for sale of Secure Voice Corporation (SVC), its VoIP and data network services subsidiary, with a tentative sales agreement in place for before Q4.
With these transactions, High Wire effectively becomes a pure-play, channel-based MSSP, with an exclusive focus on cybersecurity services sold through the channel.
“The sale of our technology services business and our anticipated divestiture of Secure Voice will provide additional working capital and streamline our operations from three separate segments into a singular, pure play managed cybersecurity company represented by our Overwatch division,” said High Wire CEO, Mark Porter. “We are now better positioned to move from ‘defense to offense,’ and begin executing on our inorganic growth strategy without the burden of today’s sky-high cost of capital and the overhang of burdensome financial instruments on our operations and market valuation.”
The transaction is valued at $11.2 million, with proceeds to be used to reduce High Wire’s overall debt by approximately $5 million. This includes eliminating $1.1 million of convertible debentures, a factoring facility and $3.2 million of notes payable. The company also transitioned its remaining $1.6 million debt into more favorable terms, allowing more cash to remain on the balance sheet.
Debt reductions and increases in cash also resulted in an improvement in net shareholder equity on a pro forma basis to more than $6 million.
“Our cybersecurity business, with its long-term, renewing contracts, provides us a more reliable and predictable revenue stream,” said Porter. “Such revenue models also tend to garner higher market valuations that enhance shareholder value.”
Under the more streamlined structure, the company believes it can also better scale and potentially double again the TCV of its managed cybersecurity services over the near term. The company’s pipeline of managed cybersecurity engagements continues to strengthen, with this driven by the signing of several new large-scale partners and global system integrators.
“We plan to engage additional global channel partners as well as expand relationships with our existing partners by encouraging them to adopt and market our entire stack of cybersecurity services,” said High Wire COO, Stephen LaMarche. “Based on our anticipated revenue growth, scalability through automation and reduced corporate overhead, we expect to reach breakeven in the second half of the year.”
Additional details related to the transaction will be available in a Form 8-K filed by High Wire and accessible on www.sec.gov.
For High Wire Networks’ cybersecurity partner program, click here.
