Redback and Bondholders to Exchange $467 Million in Debt for Equity

Redback Networks reached an agreement with a committee of its bondholders to exchange $467million in debt for new equity in the company. If all of the Notes are exchanged, the noteholders will receive approximately 95% of the issued and outstanding common stock immediately following completion of the transaction and the existing holders of common stock will initially retain approximately 5% of the issued and outstanding common stock of the company. In addition, Redback's existing common stockholders will receive the right to increase their ownership by approximately an additional 10% of the company's outstanding common stock through the issuance of two types of seven-year warrants: one for up to approximately 5% of the issued and outstanding common stock at an exercise price based on a company enterprise value of $250 million and one for up to approximately an additional 5% of the issued and outstanding common stock at an exercise price based on a company enterprise value of $500 million.


Redback Networks cited progress over the past year toward reducing operational costs, refocusing R&D efforts on next generation broadband and IP network development, and putting in place a long-term growth plan.
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