Enablence gains cash, exchange listing
July 27, 2006 Ottawa, Canada -- Editorial Director Stephen Hardy reports that Enablence, which is developing transceiver technology for FTTH applications, has positioned itself to transition from product development to delivery. The company has closed $11.3 million (Cdn) in second-round funding and announced a reverse takeover in which the company will be acquired, but end up with a listing on Toronto's TSX Venture Exchange.
July 27, 2006 Ottawa, Canada -- Enablence, which is developing transceiver technology for FTTH applications, has positioned itself to transition from product development to delivery. The company has closed $11.3 million (Cdn) in second-round funding and announced a reverse takeover in which the company will be acquired, but end up with a listing on Toronto's TSX Venture Exchange under the name Enablence Technologies Inc. The company also has lined up partners that will enable it to ramp manufacturing of its products.
Enablence was founded by Arvind Chhatbar, Ashok Balakrishnan, Serge Bidnyk, and Matt Pearson two years ago to leverage planar lightwave circuit (PLC) technology to create triplexers and diplexers for the FTTH market. While other companies also use PLCs to make such devices, Enablence has managed to integrate a gratings-based filter function into the waveguide. The resulting design obviates the need to attach a thin-film filter during the manufacturing process, decreasing complexity and package size.
The company was named one of Lightwave's "Companies to Watch" earlier this year.
According to Chhatbar, who is now the company's CEO and chairman, Enablence is now ready to move from prototyping to large-scale manufacturing. The transactions announced today are expected to aid that transition. The second-round financing came via a private placement, assisted by Paradigm Capital. The money will go toward ramping production -- which Chhatbar says is a necessary step in proving to potential customers that Enablence can deliver product in sufficient quantities -- and increasing marketing efforts.
The company will work with a pair of contract manufacturers, which Chhatbar declines to name pending an announcement in the near future. However, he says that one company is Canadian and should be able to produce as many as 5,000 parts a month. Chhatbar hopes to be ready to work with that company by November. The second company, based in the U.S., should be capable of producing 10,000 parts each month and should be online early next year.
The packaging of the product should change from the prototype stage to production. Originally, the company envisioned an optical subassembly. However, customer feedback has led Enablence to a chip-on-board approach that will likely lead them to produce transceivers. While the technology will support transceivers for a variety of architectures, Chhatbar says the company is targeting the Japanese market initially, which means GEPON devices.
Meanwhile, Enablence decided to take the quick route to publicly traded status through the reverse acquisition -- a transaction in which one company acquires another, but grants the ownership of the acquired company more shares in the newly combined entity than the acquiring company will possess. In this case, Pacific Northwest Partners (PNP), a software company, agreed to acquire Enablence while giving up its independence. Enablence Technology Inc. will assume PNP's listing on the TSX Venture Exchange, where it will trade under the ticker symbol "ENA." The financial details of the acquisition were not released, although Chhatbar revealed that Enablence gained about $1.5 million (Cdn) in the deal as well as the listing and that PNP's management and investors will own less than 10% of the new company.
-- S. Hardy