Bookham secures $72m order and pays off debts
Optical component and module vendor Bookham has secured a new supply agreement with Nortel Networks that will guarantee it at least $72 million in sales this year.
Nortel has long been Bookham's key customer, particularly since the latter acquired Nortel's optical components business back in 2002. The latest deal replaces the agreement the two firms had reached last year (see related story) and which was scheduled to expire in late April.
In recent quarters, Nortel has been responsible for around half of Bookham s overall sales.
Bookham, which manufactures InP-based optoelectronic chips at its fabrication facility in Caswell, UK, has also decided to pay off much of its long-term debt - part of which included a Nortel loan.
In all, Bookham plans to pay off around $65 million. That total includes a cash payment of $20 million plus interest to Nortel, as well as the issue of over 10 million new shares to institutional investors who will take on some of Bookham's debt in return.
Those shares have an exercise price of $7 that can be used over the next five years.
In a third transaction, $19.4 million of outstanding debentures will be converted in a stock-and-cash deal. Bookham then plans to eliminate its remaining $6.1 million of debenture-related debt in a similar move that will require shareholder approval.
While Bookham's share price dipped by almost 10% on news of the refinancing deal, the huge amount of extra stock issued meant that the company's market valuation increased.
