Tuesday August 31, 9:03 am Eastern Time
Company Press Release
SOURCE: Hybrid Networks, Inc.
Hybrid Networks, Inc. Announces Agreements For Investment and Order By Sprint Corporation And Additional Investment
SAN JOSE, Calif., Aug. 31 /PRNewswire/ -- Hybrid Networks, Inc. (Nasdaq: HYBR - news) announced today that it has entered into an agreement with Sprint Corporation (Nasdaq: FON - news) for Sprint to invest in Hybrid and to place a $10 million order for the company's products, and that three current venture capital investors have also agreed to invest additional funds.
Under the terms of the agreement, Sprint has agreed to pay Hybrid $11 million for a debenture that will be convertible after December 31, 1999 into 3,859,649 shares of Hybrid common stock at $2.85 per share, representing approximately 12.7% of the fully-diluted shares of Hybrid after both the Sprint and venture investments, and a debenture convertible into one thousand shares of preferred stock. In addition, Sprint has agreed to place a guaranteed order with Hybrid for $10 million of Hybrid's broadband wireless products to be delivered over the next year. In return for the order, Sprint will receive warrants to purchase additional debentures that will be convertible after December 31, 1999 into 2,946,622 shares of Hybrid common stock at $2.85 per share, for a total additional investment of $8.4 million when exercised. The warrants represent approximately 10.7% of Hybrid's fully diluted shares after the Sprint and venture investments. The agreement is expected to close in the near future when certain conditions are satisfied.
Three current venture capital investors in Hybrid and an additional fund associated with one of those investors have agreed to invest $ 7.1 million in Hybrid concurrently with the closing of the Sprint investment. The investors will purchase debentures that will be convertible after December 31, 1999 into 2,491,228 shares of common stock at $2.85 per share.
Sprint will have the right to nominate two persons to become members of Hybrid's board of directors, replacing current directors Douglas Leone and Stephen Halprin. In addition, Sprint will have veto rights with respect to Hybrid's issuance of additional securities as well as material corporate transactions, an assignable right of first refusal for any change of control transaction, certain pre-emptive rights to maintain its ownership percentages, and certain other rights.
''We are pleased to make this strategic investment in Hybrid Networks as Sprint prepares for its major push into the broadband wireless market. Hybrid wireless systems are installed and in commercial operation in eleven of the sites operated by companies Sprint will acquire in the next few weeks, PCTV, American Telecasting, Videotron, USA, and WBS America. We look forward to working with Hybrid in Sprint's wireless broadband roll-out,'' said Tim Sutton, President of Sprint's Broadband Wireless Group.
''Sprint's investment in Hybrid will enable us to accelerate our investments in development of our product line and to increase our production of modems and routers for the wireless broadband market. We are encouraged by Sprint's endorsement of the success we have had in the wireless market and are eager to help Sprint roll out its wireless broadband services,'' said Carl Ledbetter, Chairman and Chief Executive Officer of Hybrid. ''We believe that wireless installations will become a major factor in the broadband market because of their lower capital cost to deliver high-quality, high-reliability, multi-megabit data performance to homes and to small and medium-sized businesses.''
''We are pleased with the vote of confidence represented by the additional investments in Hybrid by existing investors,'' said Mr. Ledbetter. ''With $18.1 million in cash and Sprint's substantial order we will be in a strong position to capitalize on our success in the wireless broadband industry.''
Hybrid Networks, Inc., based in San Jose, Calif., is a broadband access equipment company that designs, develops, manufactures and markets cable and wireless systems that provide high speed access to the Internet for both businesses and consumers. Hybrid's customers include cable operators, broadband wireless systems operators, Internet service providers, resellers and other businesses.
Certain statements in this press release are forward-looking and involve risks and uncertainties, including statements with respect to the company, Sprint's future activities in the broadband wireless market, the installation and operation of Hybrid wireless systems at Sprint sites, Sprint's acquisition of certain companies, the future of Hybrid's and Sprint's wireless broadband businesses, Hybrid's future investment in and development of its product line and Hybrid's increase in production of modems and routers, Sprint's roll out of wireless broadband services and Hybrid's role therein, the future of wireless in the broadband market, and Sprint's and other investors' future investment in Hybrid. These risks and uncertainties include those discussed in the section entitled ''Risk Factors'' in the company's quarterly report on Form 10-Q for the three months ended June 30, 1999. The actual future results could vary materially from such forward-looking statements.
See the Hybrid Networks web site at hybrid.com .
SOURCE: Hybrid Networks, Inc.
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