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News

1 March 2007

 

Avanex sells III-V fabs

Optical network component, module and subsystem supplier Avanex Corp of Fremont, CA, USA has entered into a definitive agreement to sell a 90% interest in its subsidiary, Avanex France S.A. The sale includes Avanex’s Indium Phosphide (InP) and Gallium Arsenide (GaAs) semiconductor fabs to Global Research Company, a société à responsibilité limitée, owned by Alexandre Krivine, and to the current management of Avanex France, Didier Sauvage.

In addition to the III-V fabs, the divested business includes the laser, terrestrial pump, submarine pump and Fiber Bragg Grating (FBG) product lines. However, Avanex will maintain a development group of approximately 20 employees in France, focused on transmission products.

“The divestiture of our fabs and certain product lines simplifies our operating structure, significantly reduces our fixed costs and accelerates our path to profitability,” said Jo Major, chairman, president and CEO. “We expect to realize approximately $12.0 million to $16.0 million in annual financial improvements beginning in our fourth quarter of fiscal 2007.”

On closing the transaction (due Q2 of calendar 2007), Avanex will pay the purchasers approximately $17.3m for anticipated working capital, including accrued liabilities for past restructuring activities. At that point, Avanex France S.A. will be renamed, and Krivine will become CEO, with Sauvage being named as the company’s first vice president.

Avanex will retain a 10% interest in the divested business and will enter into several commercial and transitional services agreements.

Krivine said: “We strongly believe in the potential and opportunity of such industrial activity in Europe and more specifically in France. We believe that with the new company’s technology and expertise, it can play an international role in growing markets such as submarine and terrestrial pumps for telecommunications as well as explore new markets.”

*Avanex has also entered into a Securities Purchase Agreement with an accredited institutional investor relating to the sale of approximately 10.8m shares of common stock at a price of $1.85 per share, approximately equal to a 1% discount to the closing price on Feb. 28, 2007, for an aggregate purchase price of approximately $20m. The placement is expected to close by March 2, 2007. Avanex says it will use the net proceeds from the offering to finance the divestiture of Avanex France S.A, working capital and general corporate purposes.

See related item:

Avanex reports record revenue (up 54%) and gross margin

Visit: http://www.avanex.com