Infinera Aims to Raise $113M

Only four months after its IPO, Infinera Corp. (Nasdaq: INFN) has announced plans to issue a further 5 million new shares to the public market, while its stockholders also plan to sell 5 million existing shares to public investors. (See Infinera Preps Offering.)

A document filed with the Securities and Exchange Commission (SEC) shows that Infinera plans to issue 5 million new shares, which, after costs, would add $113.4 million to the company's coffers. Its underwriters will, if the issue goes ahead as planned, have the option to buy a further 1.5 million shares, a move that would boost the company's net proceeds to an estimated $147.7 million.

Those net proceed sums are based on Infinera's closing share price from last Thursday of $23.97. Having started today with a slight dip, the stock is currently trading at $24.80, up $0.42 cents, about 1.7 percent, from Friday's closing price of $24.38.

None of the proceeds from the stockholders' planned sale of 5 million shares would go to the company.

In the SEC document, Infinera notes it intends to use the money raised "for working capital and other general corporate purposes, including to finance our growth, develop new products, fund capital expenditures, or to expand our existing business through acquisitions of other businesses, products or technologies."

The vendor added, though, that it does "not have agreements or commitments for any acquisitions at this time."

When the company reported a net loss of $26.1 million, or $1.10 per share, on revenues of $58.4 million for its second quarter ended June 30 this year, it had $198 million in cash, cash equivalents, and short-term equivalents. (See Infinera Revenues, Losses Widen and Infinera Smooths Out the Lumps.)

The new issue would take its cash pile to more than $310 million, fueling speculation that the company is planning an acquisition.

An executive from a rival equipment firm, who requested anonymity, said he expects to see Infinera, which specializes in long-haul optical gear, buy its way into the metro optical market.

The executive believes Infinera wants to find a quick way to break into Tier 1 carriers, and that adding metro optical capabilities to its portfolio would be the best way to capture business from the world's leading incumbents. "That's where the big money is," says the source.

Infinera currently generates much of its current income from Level 3 Communications Inc. (NYSE: LVLT), and has also won deals with the likes of XO Communications Inc. , Cox Communications Inc. , and 360networks Inc. (See Infinera Pulls a 360, XO Picks Infinera Again, Cox Picks Infinera, Infinera Adds to Euro Footprint, Infinera Muscles Into Interoute, and Infinera Reaches Level 3.)

Infinera says it can't comment any further on the secondary offering and referred Light Reading to the SEC filing.

— Ray Le Maistre, International News Editor, Light Reading