Spyware firm NSO mulls shutdown of Pegasus, sale of company

Pegasus software can track a user’s mobile phone, and its misuse has landed NSO at the centre of high-profile privacy and human rights abuse cases. — AFP

NSO Group Ltd, the scandal-plagued spyware company that’s in danger of defaulting on its debts, is exploring options that include shutting its controversial Pegasus unit and selling the entire company, according to people familiar with the matter.

Talks have been held with several investment funds about moves that include a refinancing or outright sale, said the people, who asked not to be identified as the discussions are private. The company has brought in advisers from Moelis & Co to assist, and lenders are getting advice from lawyers at Willkie Farr & Gallagher, the people said.

The prospective new owners include two American funds that have discussed taking control and closing Pegasus, one of the people said. Under that scenario, the funds would then inject about US$200mil (RM847.10mil) in fresh capital to turn the know-how behind Pegasus into strictly defensive cybersecurity services, and perhaps develop the Israeli company’s drone technology, one of the people said.

A spokeswoman for Herzliya-based NSO declined to comment. A representative for New York-based Moelis said the company declined to comment. A representative for Willkie Farr didn’t immediately respond to requests for comment. Elements of the potential transaction were reported earlier by Debtwire.

Pegasus software can track a user’s mobile phone, and its misuse has landed NSO at the centre of high-profile privacy and human rights abuse cases. The product allegedly was supplied to governments that used it to spy on political dissidents, journalists and human right activists. Pegasus was also reported to have been used in recent months to hack the mobile phones of at least nine US State Department employees.

The company has said it sells the technology to law enforcement and government agencies to prevent crime and terrorism, and that it has ended contracts with clients that abused it. The US Commerce Department nevertheless blacklisted NSO, which said in November it was seeking to reverse the decision, “given that our technologies support US national security interests and policies”.

Apple Inc has sued NSO, seeking to bar the spyware firm from using its products and services, and said it would start notifying users targeted by state-sponsored hacking.

The US restrictions put added pressure on NSO, which needs to pay back about US$450mil (RM1.90bil) in debt, just two years after a management buyout that valued the company at about US$1bil (RM4.22bil). Moody’s Investors Service said last month there’s an increasing risk the company will violate the terms of its loans.

A loan with a face value of over US$300mil (RM1.27bil) that NSO issued in 2019 was trading in November at an all-time low bid of 70 cents on the dollar. It was quoted Monday at a bid of 50 cents on the dollar, according to people familiar with the prices.

A shutdown of Pegasus could leave NSO as a much smaller and potentially less valuable company, because the unit accounts for about half of NSO’s revenue. The company expects to record about US$230mil (RM974.16mil) in sales this year, one of the people said, 8% less than in 2018. – Bloomberg

Article type: metered
User Type: anonymous web
User Status:
Campaign ID: 1
Cxense type: free
User access status: 3
Subscribe now to our Premium Plan for an ad-free and unlimited reading experience!

Next In Tech News

Self-driving vehicles on UK roads by 2025 under new government plans
Pairing your phone with your car can be a hassle, but it’s worth it
Binge-watch much?�Streaming doesn’t have to be an energy-hog
Is your solar power system performing at its best?
‘Escape Academy’: Hone your skills for the next escape room adventure
Britain sets out roadmap for self driving vehicle usage by 2025
Crypto exchange FTX ordered to halt 'false and misleading' claims by U.S. bank regulator
Musk approaches brain chip startup Synchron about deal amid Neuralink delays -sources
Russia to enforce search engine disclaimers on five foreign IT firms
Stablecoin Tether's reserves fell $16 billion in second quarter due to redemptions

Others Also Read