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Electronics Production | March 02, 2007

Avanex divests Opto fabs in France

Avanex Corporation, a pioneer of intelligent photonic solutions that enable next-generation optical networks, has entered into an agreement to sell a 90 percent interest in its French subsidiary, Avanex France S.A.
This also includes its Indium Phosphide (InP) and Gallium Arsenide (GaAs) semiconductor fabs to Global Research Company, a societe a responsibilite limitee, owned by Alexandre Krivine, and to the current management of Avanex France S.A, Didier Sauvage. Avanex Corporation also announced that it entered into a definitive agreement with an accredited institutional investor relating to a private placement of approximately 10.8 million shares of common stock for aggregate proceeds of $20.0 million.

In addition to the previously mentioned semiconductor III-V fabs, the divested business includes the laser, terrestrial pump, submarine pump and Fiber Bragg Grating (FBG) product lines. Avanex Corporation will continue to maintain a core development group comprised 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."

The transaction is expected to close in the second quarter of calendar 2007. Upon closing, Avanex Corporation will pay the purchasers approximately $17.3 million for anticipated working capital including accrued liabilities for past restructuring activities. Avanex Corporation will retain a 10 percent 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," said Mr. Major.

Upon closing of the transaction, Avanex France S.A. will be renamed. Mr. Krivine will be named CEO and Mr. Sauvage will be named the company's first vice president.

Mr. 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."

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