Selected by AT&T in 2016 as one of their eight suppliers of the year out of more than 5,000 companies, well-established Frisco, Texas-based network deployment firm Nexius cemented a relationship with the carrier that would see them become one of their leading suppliers and turfing contractors.
Wireless infrastructure manufacturers, distributors, and contractors were eager to accept Nexius’s business and provide materials and other services to its subsidiaries, Velex, Velex SI, AccuV, Allios, Intelgica, and MyndCo, operating under the Infiniux group under the leadership of CEO Gaby J. Saliby.
In a 2021 industry online advertorial, Saliby said, “By seeing the big picture, we consider the interrelatedness of all network elements in the most practical ways while concurrently focusing our attention on the important small details of each project, our experience and deep understanding of wireless and fiber network technology, paired with our ability to streamline the deployment process, makes Nexius a valuable business partner.”
And Saliby further strengthened the deployment process when Allios, Nexius’s supply chain subsidiary, and Velex, the construction side of the house, opened a new warehouse in May of 2022 in Bloomington, Minnesota.
But Saliby’s warehouse announcement infuriated many distributors trying to get Nexius and its subsidiaries to pay their outstanding invoices with aging as long as 12 months and refused to provide additional products for Allios’s kiting program.
The first $1.25 million in unpaid invoices are exposed
Golden Gate Communications, LLC of Santa Barbara, California, filed a lawsuit against Allios, Inc. in December, alleging that Allios failed to pay 403 invoices for telecommunications equipment they provided, totaling $1,252,580. Golden Gate filed the lawsuit in the U.S. District Court Northern District of Texas, stating that throughout 2021 and 2022, Allios sent hundreds of purchase orders.
Although Golden Gate’s master supplier agreement required Allios to pay within 30 days of receiving an invoice, they were frequently past due.
But in late 2021 and early 2022, Allios stopped paying invoices, the complaint states.
Golden Gate said that they then put a hold on the account, and Allios then paid a couple of invoices, ordered additional materials, and didn’t pay for them as well, severing their relationship. A representative of Golden Gate said last evening that they would not be commenting on the lawsuit.
Infiniux lists Allios as a subsidiary under their umbrella of companies; however, according to a document reviewed by Wireless Estimator, Allio’s attorney states that “Allios, Inc. is owned by NWON, LLC.” NWON, LLC was incorporated in Delaware on July 23, 2018. The Delaware Division of Corporations will not provide any additional information.
Nexius’s debt wings are widespread
Wireless Estimator contacted eight distributors who identified they could not receive payment for past-due invoices. The approximate total was over 14 million. However, that amount might only scratch the surface of Nexius’s indebtedness, the higher percentage of unpaid receivables being attributed to Allios.
Attempts to contact major manufacturers that dealt directly with Nexius were unsuccessful since most of them are public companies and are restricted in what they can publish. It is known that CommScope provided products for Nexius’s clients, but they will likely be another company in an extended line of creditors.
In its Q4 2022 Security Exchange Commission filing, CommScope stated that its “doubtful” accounts receivable totaled $82.8 million, a marked increase of $21.9 million from $60.9 million identified in Q3. CommScope did not provide any guidance on why there was a 36% increase within three months, although Allios could be a significant contributor.
It is unknown what amount is owed to the nation’s contractors
Contractors are also owed an unspecified amount for services or products they provided Nexius.
One contractor informed Wireless Estimator that they were owed $123,000 and would not release materials they had received for other sites until they were paid.
If contractors aren’t paid, there will likely be a trickle-down effect, again hitting distributors as their contractor clients’ aging increases.
MasTec acquires Nexius’s and certain subsidiaries’ assets
Shortly after mid-2022, Coral Gables, Florida-based MasTec Network Solutions, became aware of Nexius’s cash crunch and worked out a deal with Nexius’s lender, PNC Bank, to purchase the assets that were secured by the bank’s loans.
It provided for an interesting fire sale acquisition since MasTec’s annual report released in April cautioned that the industry is very competitive and national companies like Black & Veatch and Nexius could impact their future.
According to two sources, Wireless Estimator identified that before inking the agreement with PNC Bank, MasTec and AT&T met, and AT&T said they were supportive of the transaction that would assist in maintaining the carrier’s site builds that would be managed by MasTec, increasing their market share.
Although it was known by many employees of Velex and other contractors in early January that the agreement would be inked, it wasn’t until Friday that MasTec announced it in a letter to its vendors.
In part, the email stated, “On January 20, 2023, in a foreclosure sale held by the secured lenders of Nexius Solutions, Inc. and certain of its affiliates, including Velex SI, Inc., and Allios, Inc. (“Nexius Entities”), MNS South, LLC (“MNS South”), an affiliate of MasTec, Inc. bought certain of the assets of the Nexius Entities which served as collateral to the lenders’ loans. Neither MNS South nor any affiliate of MasTec, Inc. assumed any of the liabilities of the Nexius Entities, including claims of vendors, suppliers, and contractors (“Vendors”), and has no obligations with respect thereto.”
MasTec said that they intended, “whenever commercially feasible and provided it can reach a mutually acceptable arrangement with certain former Nexius customers,” to complete existing projects.
MasTec provided a form to vendors, requesting that they complete the document with invoices and detailed backup for their claims against Nexius and submit it to vendor management by March 20.
Two suppliers and six contractors contacted Wireless Estimator questioning why, if MasTec emphatically stated that they did not acquire Nexius’s liabilities, were they anxious to resolve their claims, and who would be paying for those invoices?
Those concerns should be addressed to MasTec; but the company said in its request that “to expedite the process as much as possible, all calls with vendors will be paused to allow MNS manpower to focus on the review and contracting process with vendors.”
MasTec said, “Unfortunately, the process of dealing with these claims will take several weeks and realistically cannot be shortened.” The company said it is “doing its best to get the projects back on track.”
A contractor said, “It sounds like they’re just trying to ensure we don’t put liens on their sites.” It is unknown if all states prevent suppliers to suppliers to have lien rights.
“It’s an exercise in futility,” a small distributor owed over $40,000 informed Wireless Estimator. “There is no way I’ll get paid for what I provided them since it wasn’t specifically for any particular cell site.”
MasTec did not have to file with the SEC the amount that they paid for the assets since it did not create a material change in their business that is projected to generate revenues of approximately $13 billion in 2023.
Velex’s crews and management were still working on AT&T and other projects Monday afternoon, according to three supervisors contacted by Wireless Estimator. They said they were being paid by Velex and believed that a transition to MasTec would occur sometime this month or early April.
Could bankruptcy see $95 million owed?
Whatever cash Nexius has left will most likely be used to maintain ongoing projects and not pay any suppliers since preferential treatment is illegal when a company knows that it will be declaring bankruptcy and courts will require repayment.
Since PNC Bank was a secured lender, it was permissible for them to foreclose on Nexius’s loans and sell its assets, including trucks, installation, and other equipment.
Industry observers believe it could be up to $95 million or more owed to creditors after they submit their claims.
So, what went wrong?
Distributors polled by Wireless Estimator believe Nexius’s downfall was primarily caused by growing too large too fast, especially Allios’s expansion.
“It’s possible that to get ahead of supply chain issues, Allios bought beyond what they could pay for, and their house of cards fell,” said one distributor’s executive.
A Velex construction manager said COVID-19 and supply chain problems added to their difficulties.
All suppliers said that former business relationships ended when they attempted to get paid for delinquent invoices, and they were led to believe that they would be paid until Nexius collapsed. Most distributors said it was doubtful that they would file a lawsuit to recover their losses.
“You can’t bleed a stone,” said a supplier’s representative. “Why throw away money to an attorney to stand in line to find out your judgment is as worthless as their promises.”
A veteran distributor’s representative said that part of the problem was because Nexius was working under an AT&T matrix of pricing that was established years ago and inflation chiseled away the company’s profit. He also noted that after reviewing all of his major losses over many years, they were all AT&T business related.
Editor’s Note: MasTec and Nexius were contacted numerous times since December 19, 2022 for this article but did not respond.