Bookham & Nortel amend supply agreement

Bookham Inc has entered into an agreement with Nortel Networks Corp to
amend the current supply agreement and secured loan notes between them. As part of the agreement, Bookham expects to receive orders from Nortel Networks for product shipment over the next year of $50m.

Bookham is discontinuing as part of its transfer of product assembly production to Shenzhen, China. Bookham also expects to receive purchase order commitment from Nortel for current products covering its demand over the next twelve months.

Both companies agree to product pricing increases and amended payment terms for the period. Both are working to finalise the purchase commitment for the ongoing products, to be completed in the next 15 days. The agreement expires on April 29 if definitive documentation is not entered into before then.

Both have also agreed to adjustments in the collateral and prepayment provisions for a 12-month period for the senior secured loan notes between Bookham and Nortel.

Resulting from the agreement, Bookham anticipates revenue, gross margin and operating cash burn will improve significantly in the 4Q FY 2005.

"We believe this arrangement will enable us to provide enhanced delivery service to Nortel, an important and valued customer," said Bookham president and CEO, Giorgio Anania.

"I anticipate that this latest agreement with Nortel .. will have a positive impact on our financial performance .. [and].. enable Bookham to maintain its schedule for the successful transfer of production capabilities to China."