Finisar Corp, which makes high-speed network gear, said it has agreed to establish a new $70 million credit facility with Wells Fargo Foothill.

The company said the revolving line of credit includes a $10 million letter of credit sub-facility.

Finisar said the new credit facility will be used to finance working capital and to refinance existing indebtedness, including the repurchase of a portion of the company's outstanding convertible notes due October 2010.

The new credit facility, which requires Finisar to maintain a specified fixed charge coverage ratio, is expected to mature in four years from its closing date, the company said in a statement.

The deal is expected to be closed by the end of this month.

Finisar said the new credit facility will replace its existing $45 million credit facility with another bank.

Finisar had in September, opted for a 1-for-8 reverse split of its common stock, intended to increase earnings per share and raise investor interest in the stock.

Shares of the company had closed at $9.21 Friday on Nasdaq. (Reporting by Saqib Iqbal Ahmed in Bangalore; Editing by Maju Samuel)

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