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Osicom to Restructure, Abandons IPO Plan

September 06, 2000|Bloomberg News

Osicom Technologies Inc. shares fell 15% after the Santa Monica-based company said it won't sell stock to the public in its optical networking unit, Sorrento Networks Inc., and instead will adopt its name. Osicom dropped $8.69 to close at $48.31 on Nasdaq. The company said in December that it planned an initial public offering for its Sorrento unit, which makes gear that moves and directs traffic on fiber-optic networks. Osicom instead chose to keep Sorrento a part of the parent, take its name and replace Osicom's top executives with their counterparts at Sorrento. Osicom decided against a Sorrento IPO because it would have had to pay taxes when it distributed the new shares, said Osicom executive John Mason. The unit will inherit Osicom's cash and cash equivalents, lessening the need to raise money through an IPO. The Sorrento unit had $4.7 million in sales during Osicom's fiscal first quarter ended April 30. Osicom will change its name to Sorrento within 90 days. It named Sorrento founder and Chairman Xin Cheng to be its chairman, president and chief executive. Rohit Phansalkar, Osicom's current chairman and CEO, and Oren Shaffer, its president and chief operating officer, will resign their management roles.

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