Kaiam explores alternatives as UK operations go into administration

Optical transceiver vendor Kaiam is seeking alternatives to bankruptcy after potential partnership and investment deals foundered last month. The company was forced by UK law to place its Livingston, Scotland, operations in administration when it became clear that it wouldn’t meet its payroll obligations for the month. The action resulted in the closing of its manufacturing plant there on December 24, Christmas eve.

Jan 3rd, 2019
Content Dam Lw Online Articles 2019 01 Lwkaiam010319

Optical transceiver vendor Kaiam is seeking alternatives to bankruptcy after potential partnership and investment deals foundered last month. The company was forced by UK law to place its Livingston, Scotland, operations in administration when it became clear that it wouldn’t meet its payroll obligations for the month. The action resulted in the closing of its manufacturing plant there on December 24, Christmas eve.

Kaiam has produced optical transceivers and related components based on a proprietary integration and packaging platform (see, most recently, “Kaiam offers flattop Mach-Zehnder Athermal AWG for 5G fronthaul”). Its latest iteration of the platform, LightScale2, debuted at ECOC 2016 (see “Kaiam launches LightScale2 transceiver platform at ECOC”). LightScale1 was a MEMS-aligned hybrid optical integration approach; LightScale2 further streamlined the packaging. "Kaiam's MEMS-based packaging is intrinsically dense, combining best-of-breed components such as InP lasers, silicon photonics, and silica-waveguide integrated optics,” explained Kaiam President and CEO Bardia Pezeshki at the time.

The company hoped to leverage its technology to meet the high-volume, low-cost requirements of large data center customers. However, it had trouble convincing such customers that a company of Kaiam’s size could meet their needs, Pezeshki told Lightwave today, leaving it with a large-scale facility in Scotland without the orders to keep it fully utilized. The resulting financial strain on the company led Pezeshki to seek partnerships (including potential acquisitions of Kaiam) that might provide another way into the mega data center space, as well as additional investment that would keep the company’s engines running.

Pezeshki indicated that several promising discussions failed in December when sudden turbulence in the U.S. public markets and ongoing U.S./China trade tensions caused potential partners and investors to rethink the opportunity.

The closing of the UK facility leaves Kaiam without its primary product manufacturing resource and therefore in a difficult position. Pezeshki said he is currently in discussions with potential white knights and that there’s value in the company. “I’m actually really happy with the Kaiam transceiver,” he explained. “We’ve got, I think, the best 100G transceiver out there. Fundamentally the best performance and the best cost structure…There are, obviously, a lot of interested parties; I think a lot of people appreciate the technology that Kaiam has developed.”

A sale of the company could come before or after filing for bankruptcy. “The odds are that we will also go into some sort of insolvency process in the U.S. as well,” Pezeshki stated during the call.

Either way, Pezeshki believes he must move speedily. “You can’t drag this on for months because you’ll lose the team,” he said. “So I think we have to work fairly fast. It’s got to be – certainly, it’s not months; it may not even be weeks. You have to work quickly to stabilize things.”

For related articles, visit the Business Topic Center.

For more information on optical modules and suppliers, visit the Lightwave Buyer’s Guide.

More in Companies