Enablence to add Pannaway Technologies to FTTx Networks Division

Nov. 4, 2008
NOVEMBER 4, 2008 -- Enablence Technologies Inc. has signed a definitive agreement to acquire Pannaway Technologies Inc. and merge it with Enablence's FTTx Networks Division. The move is subject to certain approvals including TSX Venture Exchange approval, consents and conditions.

NOVEMBER 4, 2008 -- Enablence Technologies Inc. (search for Enablence) has signed a definitive agreement to acquire Pannaway Technologies Inc. (search for Pannaway) and merge it with Enablence's FTTx Networks Division. The move is subject to certain approvals including TSX Venture Exchange approval, consents and conditions.

The agreement calls for Enablence will issue 25,750,000 common shares in exchange for all the outstanding shares of Pannaway, which includes 5,500,000 common shares to be issued on the conversion of certain outstanding Pannaway debt. The shares will represent approximately 12% of the total issued shares of Enablence after the transaction closes. In addition, Enablence will also issue a US$3 million unsecured 10 year note bearing 5% interest and convertible for five years. This note is convertible after three years at Enablence's option at the greater of a minimum conversion price based on the value of an Enablence common share at the date of closing of the transaction and market price at the time of conversion.

Pannaway provides converged broadband access equipment that supports traditional POTS, DSL, ADSL 2+, active point-to-point optical, and GPON. This will be the second FTTx equipment provider Enablence, which started as a component provider, has acquired. The company bought GPON/EPON vendor Wave7 Optics earlier this year.

"With this merger, Enablence's FTTx Division will have one of the broadest set of access solutions in the industry, an expanded customer base of 420 customers, and a capability to provide our customers with an evolutionary path from Ethernet/IP to FTTx using state of the art technologies," said Arvind Chhatbar, CEO of Enablence. "We anticipate that the merger will permit the entire FTTx Division to achieve positive cash flow in fiscal year 2010 contributing to our drive towards profitability by expanding our market reach to include existing DSL-based services providers seeking to evolve their networks to optical access.

"The two companies have been working together over the last six months to provide solutions to customers which was a true catalyst for this deal," Chhatbar continued. "This will enable the combined FTTx Division to support all current customers and position it with more in-depth product lines for future growth. With the combined focus on access network solutions we will become a logical choice for customers when service providers are choosing their partners for access technology."

As both companies have enjoyed "solid growth," Enablence believes the merger will result in a company well positioned to capture market share and withstand competitive and economic pressures.

"Clearly the benefits of the combined entity are larger than the benefits of each company alone," said Mark Carpenter, president of Pannaway. "Enablence brings state of the art products, financial stability, new and innovative technologies, and experienced staff and management to this deal with a strong dedication to access markets and customer focus."

The operations of the two companies will be "streamlined to help achieve cost savings and move toward profitability," according to Enablence.

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