CALIAN TECHNOLOGY Ltd. TO DIVEST
E-SERVICES BUSINESS UNIT
Company To Focus Solely On Core Resourcing And Systems Engineering Business
Kanata, Ontario May 16, 2001: Calian Technology Ltd. (TSE.CTY) announced today that subsequent to a complete review of its operations and a meeting of its Board of Directors, it intends to divest itself of its e-Services business as a going concern in order to focus solely on its core Resourcing and Systems Engineering business in North America. Calian will seek to complete the divestiture of its e-Services business unit by June 30th, 2001.
Larry O'Brien, President & CEO stated, "Companies such as Calian have historically generated significant double digit returns on capital employed. As Calian grew and was examining ways to expand its service offerings, it made the decision to complement its traditional services business with related e-Business activities such as e-Learning, Content Management and Management Consulting. It became evident, as Calian entered into these business areas, that the required capital investments and research activities far exceed the normal investments made in the resourcing business.
"Given the significant investments required to sustain the e-Services activities, the decision has been made that in order for us to enhance shareholder value, it was in the best interest of the Company to focus solely on our Resourcing and Systems Engineering business activities. These provide stable, predictable returns from long-term contracts with blue-chip customers and require little investment while generating significant return on capital employed. In contrast, e-Services activities require significant equity capital, a tolerance for volatility and a willingness to absorb both positive and negative financial performance. Calian needs predictable cash flows in order to maintain its balance sheet and to continue to grow our working capital as expected by our shareholders."
O'Brien continued, "As we go forward, Calian is committed to ensuring the greatest possible return to its shareholders. We believe that returning the Company to doing what it does best makes sense for the long-term viability of Calian. By focussing our efforts on these activities, Calian will be able to maintain its world-class reputation as a leading provider of Resourcing and Systems Engineering services."
There are approximately 70 Calian employees directly associated with the e-Services business to be divested. "We recognize that our employees bring the most value to the e-Services business, so we will negotiate with prospective buyers to maximize opportunities for these employees," said Mr. O'Brien. "We will work with all affected employees to ease their transition through the process."
Today 9 employees received their notice. The balance of the e-Services employees will be associated with the divestiture of the e-Services business. Calian currently employs approximately 2,500 individuals in Canada and the United States.
Calian Technology Ltd. (TSE:CTY) sells technical and professional services to industry and government. In the 2000 fiscal year Calian had sales in excess of $125 Million.
For further information, please contact:
Chairman, President & CEO
Telephone: (613) 599-8600
President & CEO
Right Turn Communications
Telephone: (613) 850-1900
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