MARCH 1, 2007 -- Avanex Corp. (search for Avanex), a provider of intelligent photonic devices for next-generation optical networks, says it has entered into a definitive agreement to sell a 90% interest in its French subsidiary, Avanex France S.A., including its indium phosphide (InP) and gallium arsenide (GaAs) semiconductor fabs to Global Research Co., a société à responsibilité limitée, owned by Alexandre Krivine, and to the current management of Avanex France S.A., Didier Sauvage.
In addition to the semiconductor III-V fabs, the divested business includes the laser, terrestrial pump, submarine pump, and fiber Bragg grating (FBG) product lines. Avanex plans to maintain a core development group of about 20 employees in France focused on transmission products.
According to Jo Major, Avanex's chairman, president, and chief executive officer, "The divestiture of our fabs and certain product lines simplifies our operating structure, significantly reduces our fixed costs and accelerates our path to profitability."
He adds that the company expects to realize between $12 million and $16 million in annual financial improvements beginning in fiscal 4Q07.
The transaction is expected to close in the second quarter this calendar year. Upon closing, Avanex will pay the buyers approximately $17.3 million for anticipated working capital including accrued liabilities for past restructuring activities.
The company says it will retain a 10% interest in the divested business and will enter into several commercial and transitional services agreements.
"The series of commercial agreements are designed to ensure our customers reliable access to the technology, continuity of supply, and provide transition support," says Major.
Upon closing of the transaction, Avanex France S.A. will be renamed; Krivine will be appointed chief executive officer and Sauvage will be named the company's first vice president.
Avanex says it also entered into a Securities Purchase Agreement with an accredited institutional investor relating to the sale of roughly 10.8 million 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 $20 million. The placement is subject to customary closing conditions and is expected to close by March 2, The company plans to use the net proceeds from the offering for the financing of the divestiture of Avanex France S.A., working capital, and general corporate purposes.