| 12 December 2001 |
ZHONE TECHNOLOGIES ANNOUNCES $500 MILLION EQUITY INVESTMENT
Zhone Technologies, a newly formed company founded by seasoned communications executives, announced today it has raised more than $500 million in startup capital -- the largest equity financing ever raised by a communications equipment startup -- to execute on its plan to become a new breed of equipment provider with a new vision of product delivery and support for telecommunications carriers worldwide.
Principal investors include Kohlberg Kravis Roberts & Co. (KKR),Texas Pacific Group, Inc. (TPG), and New Enterprise Associates (NEA). Credit Suisse First Boston (CSFB) acted as the placement agent in the funding round.
Zhone plans to rapidly create critical mass by using the funds to augment organic development with the acquisition of applicable technologies and expertise from both private and public companies. The company will combine existing solutions with Zhone intellectual property to create a product portfolio that is purpose-built to supply multi-million-user next-generation networks with a rich array of voice, video, Internet, and entertainment services cost effectively.
"Most startup companies today are caught up in a funding cycle that limits their product vision and slows time to market," said Mory Ejabat, chairman and chief executive officer of Zhone Technologies. "They use iterative funding rounds to first develop technologies, then create sales and support channels, and finally to expand their product set in sequential fashion. Zhone's strategy is to deliver a total solution very rapidly by taking advantage of existing technologies and expertise to fuel parallel development efforts and to acquire proven channels and seasoned support teams in the process. With this large investment in place, we have all the capital we need to fully execute on our plan."
Zhone Technologies was founded in June 1999 by an executive team that grew telecommunications pioneer Ascend Communications, Inc., from its startup roots to a multi-billion dollar company within a decade. Mory Ejabat joined Ascend in 1990 as vice president of operations and served as president, CEO, and director of Ascend beginning in June 1995. Jeanette Symons co-founded Ascend in 1989 and served as executive vice president of advanced products and chief technical officer. Symons is chief technical officer at Zhone. Bob Dahl, chief financial officer of Zhone, formerly was vice president of finance and CFO of Ascend. Ascend was acquired by Lucent Technologies (Nasdaq:LU) for $24 billion in June 1999. Both Symons and Ejabat continue to provide consulting and support to Lucent on transition issues.
"Zhone's plan to establish a rapid and strong market presence will allow the company to quickly capitalize on the multi-billion-dollar opportunities resulting from telecom reform worldwide. We believe they have the right team to deliver on that vision," said James Coulter of TPG.
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