mPhase terminates Pliant Systems’ assets purchase

mPhase Technologies has nixed a deal to acquire the assets of Pliant Systems, which has is in Chapter 11 bankruptcy.

mPhase had offered a package to acquire all of Pliant’s assets--now expected to be liquidated--for $3.6 million, including $2.4 million in cash and $1.2 million in collected accounts receivables. Pliant’s creditors’ committee rejected that offer and countered with one requiring mPhase to pay more than $4 million in cash for those assets.

“We made what we thought was a good offer, and we had hoped to have a deal where we would not only acquire the assets that we thought would be a good fit for mPhase but it also would have saved some jobs,” said Michael Meek, an mPhase spokesman. “They (creditors) wanted $4 million in cash, and we weren’t prepared to offer that.”

Meek said Pliant’s technology would have helped mPhase move its ADSL-based video and high-speed data system deeper into telephone networks by providing a multi-access-enabled digital loop carrier (DLC) that could have served as a network-based central office, of sorts, where mPhase’s equipment could reside.

“Our reach right now is about 2.2 miles (from the central office to the subscriber residence using ADSL),” Meek said. “If you have these DLCs that are now more sophisticated, it's very possible that you can turn those into central offices. Now you’re really talking about your reach being extended.”

mPhase was already headed in that direction in its product development, but buying Pliant’s assets would have accelerated the process, he said.

“We have a proprietary technology that enables telcos to cost-effectively and more reliably deliver television and other services over DSL,” said Meek. “Pliant is a direction that we were headed into anyway, and when they ran into (financial) problems, it seemed a good time to step in.”