Oclaro to sell assets to pay off new bridge loans

Optical component and subsystems vendor Oclaro, Inc. (NASDAQ: OCLR) has taken out a series of short-term bridge loans – and plans to sell some assets to help pay them off.

The company revealed today as it announced figures for its third quarter of fiscal year 2013 that it has taken out $25 million in short-term bridge loans from Providence Equity Capital Markets. As part of the agreement, Oclaro has “agreed to complete the sale of certain assets, product lines or operating segments of our business expeditiously, and we are actively engaged in a corresponding process,” according to a company press release.

Providence joins Wells Fargo Bank and Silicon Valley Bank as a lender under Oclaro's existing credit agreement, which was revised. The new credit agreement includes provisions for Oclaro to “re-borrow” at least some of funds the agreement covers after it pays off the current loans.

"The financing we announced today is an initial step in our plan to simplify the company and develop and implement a profitable operating model,” said Alain Couder, Oclaro’s president and CEO, via the same press release.

Oclaro took out the loans as its fiscal third quarter, which ended March 30, 2013, saw revenues of $141.6 million, at the lower end of its guidance. The figure represents a significant decline from the $159.5 million of the previous quarter. GAAP gross margin also declined sequentially, from 14% to 9%.

The company suffered a GAAP operating loss of $28.9 million during the quarter, which included $11.5 million of flood-related income, net of expenses, due to the flooding in Thailand in 2011 (see “Oclaro to beat guidance as it beats Thailand flooding”). Oclaro reported a GAAP operating loss of $5.7 million in the second quarter of fiscal 2013, which included a $25.0 million gain from the sale of its interleaver product line and thin film filter business.

"Our financial results were at the lower end of guidance for the third quarter, in the face of continued softness in the telecommunications market. Our sales declined further than expected, which drove a higher loss compared with the prior quarter," Couder said.

Looking forward, the company said it expects revenues for the current quarter, which ends June 29 to fall within the range of $132 million to $144 million. Oclaro also forecasted non-GAAP gross margin in the range of 9% to 13% and adjusted EBITDA in the range of negative $30 million to negative $17 million.

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