Dolphini Networks split up, sold

Colorado, Murfreesboro businesses pick up tech company's assets

Local technology firm Dolphini Networks has been acquired by a pair of companies through a quiet deal that closed last week.

Colorado-based Zayo Group purchased Dolphini’s 30,000-square-foot Cummins Station data center and colocation services under its zColo brand, and Murfreesboro-based 6PS Corp. has picked up Dolphini’s managed services, shared hosting and dedicated servers under its ServerMotion brand.

A statement on Dolphini’s website and a message on its phone line explain the firms assumed all Dolphini accounts on Sept. 20 and Dolphini is “no longer in operation.” Reached via e-mail Wednesday morning, Dolphini owner Michael Krause said the company “made a successful transition” to zColo and ServerMotion and that “no public comments will be made.”

The deal comes after several indications that Dolphini was wading in financial hot water in recent months.

Most notably, Nashville Electric Service disconnected Dolphini for five days in late August after the company ran up more than $30,000 in unpaid electricity bills. The company paid the required $22,906 to get its power restored on Aug. 30, according to NES spokeswoman Laurie Parker. In the meantime, Dolphini kept its systems running via a diesel generator.

The company also is the defendant in several legal proceedings that, combined, seek several hundred thousand dollars in damages. In one suit filed last summer, available at this link, Nashville Predators’ owner/operator Nashville Hockey Club sought nearly $161,000 in damages for several counts of breach of contract, including failure to pay $126,000 in sponsorship fees.

Public records also reveal more than $85,000 in federal tax liens against Dolphini for unpaid payroll taxes. The Tennessee Department of Labor and Workforce Development had issued a lien against the company for unemployment taxes last November, and the Department of Revenue issued its own lien in June, both for undisclosed amounts.

The state released Dolphini from the June lien on Monday — a possible indication that last week’s deal provided Dolphini a needed capital infusion.

Chris Miller, COO of 6PS, told NashvillePost.com that Dolphini “received some cash through the deal from both companies,” and that it’s his understanding “all debts can be taken care of as part of this transition.” He declined to give the value of the transaction, which he explained as an asset purchase deal that left the Dolphini shell company intact.

A Zayo Group spokeswoman declined to comment for this story. The company, which is private but holds public bonds, reported fiscal year 2010 revenue of $224 million.

According to its Web site, Zayo provides infrastructure services over fiber networks spanning 143 markets, 27 states and the District of Columbia. In late June, the company acquired New York-based American Fiber Systems, a deal that provided it with an additional 800 route miles of fiber network and brought into six new markets — including Nashville.

Miller said Dolphini was in talks with Zayo for several weeks before he was pulled into the deal to pick up the managed services contracts, a business that’s outside Zayo’s scope of services. Miller, who said he’s known Krause for “many years,” called the multi-party deal a “good mix.”

For its part, ServerMotion picked up about 100 customers from Dolphini. Miller called the transaction “pretty small,” but said it included “some big names.”