Avanex Drops Fabs

FREMONT, Calif. -- Avanex Corporation (NASDAQ:AVNX - News), a pioneer of intelligent photonic solutions that enable next-generation optical networks, today announced that it entered into a definitive agreement to sell a 90 percent interest in its French subsidiary, Avanex France S.A, including 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."

Avanex Corp. (Nasdaq: AVNX)