Xtera emerges from bankruptcy with new ownership

Private equity investment firm H.I.G. Capital, which recently sold its holdings in specialty fiber maker Fibercore, is back in the fiber-optics game via its acquisition of the assets of Xtera Communications Inc. The optical transport systems company filed for Chapter 11 protection this past November, and H.I.G. provided debtor-in-possession financing as part of that process (see "Xtera Communications files for Chapter 11, seeks sale").

Private equity investment firm H.I.G. Capital, which recently sold its holdings in specialty fiber maker Fibercore, is back in the fiber-optics game via its acquisition of the assets of Xtera Communications Inc. The optical transport systems company filed for Chapter 11 protection this past November, and H.I.G. provided debtor-in-possession financing as part of that process (see "Xtera Communications files for Chapter 11, seeks sale").

Neptune Bidco, a unit of H.I.G. European Capital Partners, provided a stalking horse bid of $10 million for the assets within the Chapter 11 proceedings. H.I.G. did not release the final terms of the acquisition.

Robert Richardson, vice president of sales, global submarine solutions at what is now Xtera Inc., said that the company exits bankruptcy proceedings with a focus on the submarine network market. He cited the money spent to leverage Xtera's Raman expertise to develop terrestrially focused optical transport systems, investigations into software-defined networking (SDN) and Optical Transport Network (OTN) technology, as well as a smaller amount of capital raised from its November 2015 IPO than expected, as factors that led Xtera to this point.

Richardson said that the company will no longer pursue development of systems for conventional long-haul and metro applications. However, he noted that submarine cable systems have evolved from a landing point to landing point design to one that focuses on point of presence to point of presence, which means the company will have systems for land-based transport in its portfolio for those final connections. Richardson also said that ultra-long-haul terrestrial applications that could leverage undersea technology – such as the infrastructure Xtera supplied to TIM of Brazil (see "TIM Brasil adds more 100-Gbps optical transport via Xtera") – could remain of interest.

Richardson is among the senior Xtera executives, alongside such names as Executive Vice President of Engineering Stuart Barnes and COO Keith Henderson, who remain with the company. Other senior-level appointments, including the company's new CEO, are expected to be announced as soon as early next week. Former CEO Jon Hopper is now chairman and CEO of Mangusta Investments, according to his LinkedIn profile.

Xtera currently has approximately 65 full-time employees, Richardson said. He noted the company has long supplemented its core staff with contractors, a practice that will continue. Xtera also will continue technology research relationships with such academic partners as Fraunhofer Heinrich-Hertz-Institut (Fraunhofer HHI).

Xtera didn't lose a single customer throughout its economic difficulties, Richardson reported; in fact, at least one offered to "become more active in the process" of setting the company back on its feet, he said. With the submarine network market expected to remain robust for the next few years (see "Why the submarine network market is so hot"), Richardson said the company had new business in the pipeline.

He also said Xtera will continue to expand its product portfolio within the undersea market, with capacity additions to its undersea repeaters one focus. He said the company already has fielded systems with advanced technology, including deployments of 8QAM and 16QAM transmission.

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