Redback Networks emerges from bankruptcy, gets $30 million investment

By Jeff Pines

Washington, Jan. 5 - Redback Networks emerged from Chapter 11 Friday, and received a $30 million cash infusion from Technology Crossover Ventures, the company said. Former bondholders now control about 91% of the company's outstanding stock.

"The majority of our debt was in bonds or notes and the reorganization plan called for a reverse split of our common stock and the creation of new shares," said a Redback Networks spokesman. Based in San Jose, Calif., Redback Networks provides broadband network equipment.

Of the company's 52.135 million outstanding shares, 47.5 million went to debtholders. Before filing for Chapter 11, it had $467 million of 5% convertible subordinated notes due 2007. Those who held shares before the company filed for Chapter 11 now hold about 2.5 million shares, but also received warrants to buy more shares.

Landlords with $15.4 million in lease claims received 2.135 million shares.

Redback filed its prepackaged Chapter 11 plan on Nov. 3 and the court confirmed it 49 days later.

TCV is a new investor in the company, the spokesman said. In return for the $30 million investment, it received 651,749 series B convertible preferred shares, which are convertible into common stock at ratio of 1 for 10. Also, TCV got warrants exercisable for 1,629,373 shares with a $5 per share exercise price. TCV's website says it has $2.4 billion under management and investments in 135 companies.

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