Sorrento Reveals Recent Investors
Separately, Light Reading has confirmed that Sorrento has an ongoing purchasing arrangement with TeraBeam Corp. (see Sorrento's Sitting on Good News). It has also been confirmed that Focal Communications (Nasdaq: FCOM), a Chicago-area competitive local exchange carrier (CLEC), has been buying Sorrento gear.
First, here's the score on the funding details. In exchange for 1,525,995 shares of common stock and warrants to purchase 381,499 shares of stock, Sorrento received a $10 million investment from Pine Ridge Investments Ltd.; Deephaven Private Placement Ltd., a subsidary of Knight Trading Group (Nasdaq: NITE); and IIG Overseas Holdings Ltd.
Sorrento further disclosed that it "considered several different financing alternatives, including those that would have raised more than $10 million in capital, and which would have had a greater impact on shareholder dilution."
The three investors bought Sorrento shares at $6.55 a piece. Sorrento's filing says it can buy back the warrants at a penny a piece within six months if its stock price exceeds $13.11 and stays there for twenty consecutive trading days (see Sorrento Shares Fall on Financing News). At midday today, Sorrento shares were down $0.65 (10.6%) to 5.53.
The company's critics -- including some shareholders -- say a stock recovery seems unlikely, given how tight-lipped Sorrento has been about revealing who its customers are and how significant some of its contracts are.
Which brings us to TeraBeam and Focal Communications -- two of Sorrento's "more than 20" customers.
"We do have a relationship with Sorrento," says TeraBeam's PR director Lou Gellos. "We haven't disclosed exactly what we're doing with them, but it's safe to say that it's not a short-term arrangement."
"We are buying equipment from Sorrento, but we don't have a contract with them," says Shelley Hughes, a spokesperson for Focal Communications. "So there's nothing long-term about our relationship."
Sorrento's other customers include AT&T Broadband, Belgacom SA, Cox Communications Inc. (NYSE: COX), Deutsche Telekom AG (NYSE: DT), El Paso Global Networks, Inrange Technologies Corp., Southern California Edison, and United Pan-Europe Communications NV (UPC) (Nasdaq: UPCOY).
For its part, Sorrento is withstanding any urge to speak freely about which firms are buying its gear. "Sorrento cannot comment on anything that it hasn't announced," a spokesperson says.
- Phil Harvey, Senior Editor, Light Reading http://www.lightreading.com