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Texas Pacific sells Paradyne shares

LOUIS HAU
Published February 14, 2004

Texas Pacific Group, the investment firm that bought Paradyne Networks Inc. and took it public in the 1990s, said Friday that it has sold its remaining 25 percent stake in the Largo company.

The sale had been expected since January when Paradyne filed a registration statement with the Securities and Exchange Commission indicating Texas Pacific might sell all or part of its 11-million shares in the maker of high-speed Internet access equipment. Texas Pacific, of Fort Worth, Texas, was Paradyne's largest shareholder before Thursday's stake sale. That distinction is now held by Internet equipment maker Nortel Networks Corp., which holds 3.3-million Paradyne shares, or a 6.93 percent stake.

Texas Pacific spokesman Owen Blicksilver said the firm's exit from Paradyne "has nothing to do with TPG's feelings" about the struggling company's prospects. On Jan. 29, Paradyne reported a fourth-quarter net loss of $1.4-million, improving from a loss of $12.2-million a year earlier.

"They've held this position for almost eight years now," Blicksilver said. "As is often the case with financial buyers from time to time, they will look for opportunities to (liquidate) their investment and return the capital to their partners."

Texas Pacific is led by managing partner David Bonderman, a former associate of Texas billionaire investor Robert Bass. The investment firm's exit from Paradyne brings an end to a relationship that never resulted in a big payoff.

The company's stock briefly benefited from Wall Street's frenzied enthusiasm for technology companies in the late 1990s, only to be brought down by the subsequent tech-stock collapse and plunge in telecom equipment purchases.

Paradyne's shares closed Friday at $3.95, down a nickel. That's just a fraction of the stock's first-day closing price of $56.25 in July 1999.

Blicksilver said Texas Pacific still made money on its investment, although he declined to specify how much. He said the firm's proceeds from its stock sales over the years exceeded what it paid to buy what is now Paradyne from AT&T spinoff Lucent Technologies in 1996. Texas Pacific paid $175-million for a majority stake in Paradyne, but the purchase price included Paradyne's Globespan high-speed modem technology, which was later spun off.

"It was an excellent investment," Blicksilver said.

Texas Pacific's sale of its stake to institutional investors means that ownership of Paradyne's stock will be more diversified, Paradine spokesman Paul Taylor said. That in turn means more shares will be available to trade, "which we view as a positive," he said.

- Information from Times files was used in this report. Louis Hau can be reached at hau@sptimes.com or 813226-3404.

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