Microcellular's 40 workers in Tralee get $10m windfall

Forty employees of Tralee based Microcellular Systems are in for a windfall of around $10 million (€8.2 million) following the sale of the year-old company to Californian wireless technology company, Interwave Communications, for $15 million.

Microcellular was the loss-making wireless business unit of telecoms giant ADC Telecommunications, when 33-year-old Kerryman, Mr Mike FitzGerald, purchased the company last July at a valuation of $5 million.

Deliberately redesigned with a flat operational structure to avoid "management bottlenecks", Microcellular's management and employees share more than 66 per cent of the company's equity.

Employees will benefit three ways from the sale to Interwave. The value of their existing options has immediately trebled, they will also be issued with additional share options and every employee will receive a cash bonus equivalent to "several months pay" at the end of the year for the next two years.

Shannon Development makes an immediate gain of $750,000 for the 5 per cent stake it took a year ago. The remaining company equity is divided between a number of private business investors. Microcellular describes itself as a niche player developing software on Interwave's niche platform, which allows companies to send all their information by mobile phone through dedicated corporate GSM networks. For its first nine months of operation, Microcellular generated around $4 million in net revenues and broke even on operating income.

Interwave's platform is emerging as a major competitor to major telecoms vendors like Ericsson, Nokia and Motorola, because its wireless office network products are proving more effective and price competitive.

Microcellular's team of 30 specialist GSM engineers - many of whom are former ADC employees - will boost its systems engineering and network planning expertise.

Interwave will now pay $5 million in cash and issue 555,556 shares of restricted unregistered common stock in exchange for all the outstanding shares of Microcellular Systems.

Interwave has agreed to pay an additional $2.5 million incentive, subject to Microcellular achieving minimum revenue thresholds for the 2001 financial year. Interwave also becomes a 20 per cent shareholder in Microcellular sister company, Propylon. Mr FitzGerald was managing director of ADC Microcellular prior to the buyout last year, when he relocated the company's research and development unit to Tralee at the encouragement of the Kerry Innovation Centre. It also has offices in England, China and the US.