Black Box Sells Federal IT Unit To PE Firm, Creating Tyto Athene

Solutions provider Black Box said Monday that it has sold off its federal government IT services business to private equity firm Arlington Capital Partners, which plans to create a new company called called Tyto Athene from the former division.

Black Box, which has been trying to address severe liquidity issues, said it is looking at other alternatives including selling other assets to address those issues.

Arlington Capital Partners, a Chevy Chase, Md.-based private equity firm, purchased 100 percent of the equity of that business for a cash price of $75 million. The Black Box federal government IT services business will operate independently as Tyto Athene, based in Herndon, Va.

[Related: Black Box Warns Investors Of Potential For Bankruptcy]

Arlington Capital Partners has at least one other IT services company in its portfolio: Integrity Applications, a Chantilly, Va.-based provider of a range of IT and other services to the intelligence community. Other companies in the Arlington Capital Partners portfolio include software, aerospace, medical, and manufacturing technology providers.

Tyto Athene spokespeople did not respond to CRN requests for further information by press time. Black Box was unable to provide a spokesperson by press time.

On its website, Tyto Athene claims to offer eight "solution pillars," including networking, unified capabilities, cyber assessments, managed services, wireless, video, access control and surveillance, and nex-generation infrastructure.

Several of the top executives of Black Box will lead Tyto Athene going forward. These include Jeff Murray, Tyto Athene CEO and former Black Box senior vice president; Chris Meilhammer, Tyto Athene chief operating officer and former Black Box vice president of network services; and Jason Alexander, vice president of operations and former Black Box vice president of network operations.

In addition, two people who formerly served as president and CEO of Black Box, Terry Blakemore and Mike McAndrew, will join Tyto Athene's board of directors.

Black Box in July said it was looking to sell its federal government IT services business, and in August said it had signed a definitive agreement for that sale. However, Monday was the first official notification about the identity of the purchaser.

Murray, in a prepared statement, said Tyto Athene, as an independent company, expects to have increased flexibility in terms of developing solutions to clients' complex IT needs.

"Our stakeholders can rest assured that the company is on sound financial footing, and that we will continue to provide our clients the services and solutions to meet their business and mission needs. Arlington has a successful history of building market-leading government services businesses and we are excited to partner with Arlington to form Tyto Athene," Murray said.

Meanwhile, for Black Box, the search continues for ways to maintain the company's liquidity.

Black Box in July warned via an SEC filing that the company may not have enough cash to make into next year without filing for bankruptcy, and that normal operations combined with selling off its federal government work might not provide enough cash to manage its $155.7 million in outstanding loans.

Black Box on Monday said it is working with advisers Raymond James and Jones Day to explore "all other strategic alternatives" to address its liquidity needs including, among others, refinancing, restructuring, and the sale of other assets.