After a failed attempt at merger around a year ago, Veracity and Broadweave have decided to give a merger a second shot. The new company will be named Veracity Networks with Veracity’s Drew Peterson as CEO. Broadweave CEO Dave Moon will remain on the board.
So what’s the new company’s first step? To go to Provo’s city council to ask for a “restructuring” of the bond debt to lower payments by $82K per month for 18 months. I’m not sure how exactly that will work out without the city basically floating the difference during that time frame (an action surely to come under fire from both incumbent providers), but I’m hoping Broadweave will take a new tack with being a bit more open as to what the heck they’re doing. After all, a significant amount of public money is still on the line and if they ask Provo to dip into the till to keep things going, citizens deserve to know what they’re getting for what may be an interest-free loan.
Broadweave was gracious enough to invite me down to their offices to inform me personally. After the sharp criticisms I’ve had for the company, I was surprised they extended the olive branch. I suppose that’s one of the many positive side effects of an almost total refresh of company management. All the same, the visit was very cordial and felt very much like a press release event rather than a heart-to-heart. (I’m still sure that my picture is on more than a few dartboards around the office.)
I see the merger as a bit of a mixed bag. Veracity brings a lot to the table including large corporate customers, experience competing against and working with incumbents (they offer services on Qwest’s network), a stable cash flow, and significant technical experience. They also bring potential access to UTOPIA for Broadweave via their existing contracts.
On the other hand, asking for another hand-out from the city instead of making it on their own will likely rankle a city council that thought they’d managed to wash their hands of the deal. If the council doesn’t go along, it begs the question as to where additional funding will be found from. Not knowing what Veracity’s available cash flow is, it’s hard to tell if that side of the equation would be able to staunch the flow of money from the surety enough to allow Broadweave/Veracity to sign up more customers. At the very least, this makes iProvo even more of an election issue than it was before for all sitting council members as well as the mayor.
For the time being, I’m content to watch from a distance and see what happens. My opinion of Broadweave hasn’t yet been changed, but I’ll willing to give them a second chance and benefit of a doubt.