DragonWave directors resign, firm delisted from TSX

DragonWave CEO Peter Allen
DragonWave CEO Peter Allen has resigned from the firm's board of directors. (File photo)

Embattled telecom firm DragonWave will be delisted from the Toronto Stock Exchange at the end of this month, the company announced Tuesday, a day after a court-appointed receiver took over control of its business and assets.

DragonWave will no longer be listed on the TSX as of Aug. 30, the company said. That followed news Monday that the firm would also be delisted from Nasdaq, a move that takes effect Wednesday. The company’s shares have been suspended from trading on both exchanges.

Receiver KSV Kofman said in a statement it will not appeal the delisting decisions.

The Kanata-based wireless networking company also said CEO Peter Allen and three others – Claude Haw, Cesar Cesaratto and Lori O'Neill – have stepped down from its board of directors effective immediately.

DragonWave’s two main creditors, Comerica Bank and Export Development Canada, successfully applied to the Ontario Superior Court of Justice Monday to have a receiver appointed with the aim of initiating a “short, court-supervised” sale of the company’s assets.

The moves come after a series of significant financial losses at DragonWave, which saw its revenues plummet from $158 million (all figures U.S.) in fiscal 2015 to an expected total of only about $36 million this year.

The company suffered a major blow in late 2015 after Nokia – which historically provided a significant portion of DragonWave’s revenue as an original equipment manufacturer sales channel – acquired DragonWave competitor Alcatel-Lucent.

The firm’s total revenues from the Nokia sales channel dropped from $84 million – more than half its total sales – in fiscal 2015 to just $11 million, or about a quarter of its total revenues, in 2017.

In a statement on Monday, DragonWave said it might consider an alternative listing on the TSX Venture Exchange or the NEX in the event it was delisted by the TSX. Officials at KSV Kofman, which is now speaking on behalf of the company, did not respond to requests for comment on Tuesday morning.

Last month, Mr. Allen conceded that the company faced “difficult operating conditions” but struck an optimistic tone when he released the company’s first-quarter earnings.

DragonWave’s revenues in the three-month period that ended May 31 fell from $12.6 million in 2016 to $9 million this year. Its quarterly loss grew to $4.3 million, compared with a loss of $4.1 million a year earlier.

In a call with analysts, Mr. Allen touted DragonWave’s June deal with SmartSky Networks to install Wi-Fi technology on planes as well as its successful cost-cutting efforts that led to operating expenses decreasing by 40 per cent year-over-year.

In May, DragonWave announced it had hired restructuring consultants Alvarez & Marsal Canada ULC to help it identify and assess strategic alternatives. The term is often used by companies considering a sale of some or all of their assets, although the process can also lead to debt or equity financing, business combinations, joint ventures and strategic alliances.