March 1, 2007 – Photonics developer Avanex Corp. says it has agreed to sell a 90% interest in its French subsidiary, including indium phosphide and gallium arsenide fabs, to limited liability firm Global Research Co. and current management, Didier Sauvage.
The business, Avanex France SA, includes the III-V fabs as well as laser, terrestrial pump, submarine pump and fiber bragg grating (FBG) product lines. Avanex will keep a core development group of about 20 people focusing on transmission products. Avanex will keep 10% ownership in the business (which will be renamed following anticipated closing of the transaction in 2Q07), and enter into “several commercial and transitional services agreements.”
“We strongly believe in the potential and opportunity of such industrial activity in Europe and more specifically in France,” said Global Research owner Alexandre Krivine.
For Avanex, the transaction will significantly reduce fixed costs and take a big step toward profitability, adding $12-$16 million in financial improvements starting later this year, noted Jo Major, chairman, president and CEO.
To help fund the divestiture, Avanex has agreed to a private placement of approximately 10.8 million shares of common stock with an accredited institutional investor. About $17.3 million of the $20.0 million in aggregate proceeds will go toward anticipated working capital (including accrued liabilities for past restructuring).