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Monday, October 23, 2006

Backdoor Play on IPO of Veraz Networks: ECI Telecom

We often look for backdoor plays in upcoming IPO's. ECI Telecom (ECIL-NASDAQ/ADR) looks to be a partial backdoor play into an upcoming IPO called Veraz Networks.

Israel's ECO Telecom Ltd (ECIL-NASDAQ/ADR) announced that Veraz Networks, Inc. has filed a registration statement on Form S-1 with the SEC relating to the proposed initial public offering of its common stock. ECI will offer an undetermined number of shares of Veraz common stock as the selling stockholder in the proposed offering.

ECI currently holds 41% of the current outstanding common stock of Veraz Networks and what appears to be about 33% of the company on a fully diluted basis. Veraz is a leading global provider of voice over IP (VoIP) softswitches, media gateways and digital compression products; and with recent strength in VoIP technology providers (not carriers, but tech providers) this is probably not all that unexpected.

The joint book-runners are Credit Suisse and Lehman; and co-managers are listed as Jefferies and Raymond James. There are currently no financial terms set in the IPO filing. Other investors in Veraz are Northwest Venture Partners, Battery Ventures, and Levensohn Venture Partners.

Veraz is based on San Jose, California.

Jon C. Ogg
October 23, 2006
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