Sorrento Turns Debt Into Equity

Communications Today, March 11, 2003

Sorrento Networks [Nasdaq: FIBR], which provides intelligent optical networking technology, has executed a definitive agreement with 100 percent of its preferred shareholders and convertible bondholders to restructure its debt into equity. The company also filed a preliminary proxy statement with the Securities and Exchange Commission for shareholder approval on this capital restructuring plan and its re-incorporation into a Delaware company. The deal says, in part, that Sorrento's $32.2 million in convertible bonds will be converted into common shares and into a portion of $12.5 million in secured convertible debentures that pay interest of 7.5 percent per annum, maturing in August 2007.

All Series A preferred shares will be converted into Sorrento common shares and into a portion of the $12.5 million in secured convertible debentures. The outstanding Series A "put" of $48.8 million against SNI will be withdrawn, company officials say. As part of the re-incorporation agreement, Sorrento will be merging its operating and non-operating subsidiaries, including Sorrento Networks Inc. and Meret Optical Communications. Both will continue to market under their current brand names.

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