Bookham and Avanex close merger

APRIL 28, 2009 -- The new combined company has been named 'Oclaro.'

APRIL 28, 2009 -- Bookham (search Lightwave for Bookham), and Avanex Corp. (search Lightwave for Avanex) have closed their merger, thereby creating one of the largest suppliers of optical components, modules, and subsystems to the long-haul and metro telecom markets. The newly combined company will be named Oclaro Inc. The company's stock will trade on the NASDAQ Global Market with the stock symbol "OCLR," beginning on April 28, 2009.

"The closing of this merger is a significant milestone in our quest to be a predominant force in the fiber-optics industry," says Alain Couder, president and chief executive officer, Oclaro. "By uniting the best components expertise of Bookham with the modules and subsystems best expertise of Avanex, Oclaro has the necessary products and technologies under one roof to become a market setter in the future of the fiber-optic market."

Beyond serving the telecom market, the company has a strategy to leverage its core technologies to expand into adjacent markets, including industrial, defense, life sciences, semiconductor, and scientific, with diversification providing both the potential for new revenue streams and strategic technological advantage.

"The completion of this transaction is a big step forward for the optical components industry, and one we believe will produce a company capable of thriving in a rapidly consolidating industry," comments Andrew Schmitt, directing analyst, optical, at Infonetics Research (search Lightwave for Infonetics). "The combined product portfolios and customer bases of Bookham and Avanex should see Oclaro positioned as one of the market leaders in metro and long-haul networks, with combined revenues placing the company firmly in the Tier 1 bracket."

Under the terms of the merger agreement, Avanex shareholders will receive, at a fixed exchange ratio, 5.426 shares of Bookham common stock for every share of Avanex common stock. Avanex's stock will no longer trade on the NASDAQ stock market. In two separate special shareholder meetings, shareholders supported the merger with 95.79% of the total Bookham shareholders' votes cast approving the issuance of shares in the merger, and 98.73% of the total Avanex shareholders' votes cast approving the merger.

In addition to approving the proposed merger with Avanex, Bookham's shareholders approved an amendment to Bookham's restated certificate of incorporation to increase the number of authorized shares of Bookham common stock to 450 million shares (on a pre-reverse stock split basis), and approved the proposal to amend Bookham's restated certificate of incorporation that, upon board approval, would effect a reverse stock split of the issued and outstanding shares of Bookham (now Oclaro) common stock (within a certain range) and a corresponding proportionate reduction in the total number of authorized shares of Bookham (now Oclaro) common stock and preferred stock.

Oclaro currently expects that the combination will be adjusted EBITDA positive in the September 2009 quarter, the first full quarter after the close of the transaction. The company also expects to generate at least $7 million of quarterly cost savings by the end of the fourth full quarter post-close, which at that time would represent approximately $28 million, or more, annually.

"The combined in-house and outsourced manufacturing operations are expected to give Oclaro significant production flexibility, which in turn is expected to drive gross margin improvement," said Couder. "Overall, Oclaro is a well capitalized, liquid company. With substantial combined cash and no outstanding debt, Oclaro has a strong balance sheet from day one."

Oclaro headquarters will be in San Jose, CA, with management of the combined companies consisting of executives and board members from both organizations. Alain Couder will be president and CEO; Jim Haynes will be chief operating officer; and Jerry Turin will be the chief financial officer for Oclaro.

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