A few weeks after the Israeli cyber security company Siren fired almost all of its employees due to liquidity difficulties, it applied to the court for the opening of proceedings and the appointment of a temporary trustee for its operation and the sale of its assets. According to Siren, “since the company is unable to pay its current debts and the extent of its assets is low, these apparently make its obligations unnecessary – and it has no choice but to submit this request.”
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This week, Judge Hagai Brenner ordered the appointment of attorney Guy Gisin as a temporary trustee for Siren, and scheduled another hearing for next week, by which time the trustee will submit a preliminary report that will also address the question of the feasibility of temporarily operating the company. The company’s request was consolidated with two additional requests from Monday Its various creditors The company has debts totaling 42.1 million shekels, after its losses since its foundation have accumulated to 297 million dollars (about one billion shekels).
Siren is currently traded on Nasdaq at a negligible value of 2.4 million dollars, but at the height of the dot.com bubble years (also under the company’s former name, Comtouch) it reached a value of over a billion dollars. Since then, it has written off 99.9% of its value to its investors.
Siren’s shares are expected to stop trading on Nasdaq on March 3rd and subsequently be delisted, due to non-compliance with the trading conditions due to the opening of the legal process. In a report on the matter last week, the company warned that “trading in the company’s shares is particularly speculative and involves substantial risks.”
In the company’s request, which was submitted to the District Court in Tel Aviv through the Arnon attorney’s office, Tadmor-Levi, it is stated that until recently 49 employees were employed in Israel, but now 6 employees remain in the company in order to complete the liquidation procedures, and 3 more employees who finish their jobs at the end of February. “The company, which has been making losses since its inception, made many efforts to sell it as a ‘living and active business’ and to continue its activities, but these efforts did not go well,” the request states. According to Siren, there are parties who are still interested in purchasing its assets.
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The company’s debts are divided as follows: about 9.2 million dollars (about NIS 34 million) to the bondholders, led by Nantahala Capital Management – one of the creditors who submitted a request to the court against the company (another creditor who submitted a request is Do-It International); About NIS 4.1 million for suppliers and other commercial entities; and NIS 3.3 million for employees in respect of vacation and convalescence fees, compensation for compensation, bonuses and the like.
On top of that, for the February salaries, she must transfer NIS 741,000 to the Income Tax and National Insurance, a payment that the company cannot make. In its application to the High Court, the company reported that it had recently received a warning letter before taking proceedings from a number of fired employees, and estimated that “appointing a temporary trustee for its operation, who will be able to maximize the company’s income, will also benefit the employees who wish to receive what they deserve.”
At the same time, Siren stated that the owner of the property it rents in Israel has realized a bank guarantee in the amount of NIS 1.8 million, and this, according to the company’s method, without justification.
A $70 million investment was almost completely wiped out
Siren was founded in 1991 by Gideon Mantel, Dr. Nachum Sharpman and Amir Lev, under the name Comtouch, and engaged in the development of e-mail software. In the late 1990s, it began providing e-mail storage services.
The company was first listed on Nasdaq in 1999, and for several years was simultaneously traded on the Tel Aviv Stock Exchange. In 2009, after 18 years of activity, the company made a business change and entered the worlds of the cloud. Its activity in recent years has been in the field of information security and cyber to identify and protect threats received by mail electronic or web files. The CEO of the company for the last three years is Brett Jackson.
In the months of January-September 2022, Siren recorded revenues of $17.3 million, an operating loss of $18.2 million, and a net loss of $25 million. At that time, it presented a negative flow of 9 million dollars from operations, and at the end of September it had 13.5 million dollars in its cash register, after completing the sale of part of its operations for 9.6 million dollars.
The largest shareholder in Siren is the American investment fund Warburg Pincus (which owns, among other things, the Max credit card company, which is in the process of being sold to Clal Insurance). Since entering into the investment in 2017, the American fund has purchased shares of Siren for a total amount of about 70 million dollars, an investment that was mostly written off.