Optical-networking-equipment supplier Sorrento Networks Corp. said Wednesday that it has signed a definitive agreement to raise about $10 million in gross proceeds from a private placement of common stock and warrants to institutional and accredited investors.
Combined with $6.35 million raised in another private placement that closed Dec. 31, the money will go toward general corporate purposes, including working capital, and to strengthen the company’s balance sheet for long-term growth.
Sorrento makes "GigaMux" metropolitan dense-wave-division-multiplexing systems designed to enhance the capacity of fiber-optic networks owned by cable MSOs and other carriers.
The company expects to get the money about one week after it satisfies closing conditions.
Sorrento agreed to sell about 2.9 million new shares of common stock and warrants to buy close to 1.5 million new shares.
Investors will get warrants to buy one share of common stock for each two shares of common stock purchased, so the effective price in the private placement is $3.44 for each unit sold. They have an exercise period of five years with an exercise price of $3.44. The warrants are callable after one year under certain circumstances.
The warrants are exercisable in cash, representing a potential $5 million in additional proceeds, bringing the total gross process of this offering to approximately $15 million assuming that warrants are fully exercised in cash.
