Catena Networks Raises $75 Million in 4th Round Financing, Bringing Total to $192 Million.

Business Editors

REDWOOD SHORES, Calif.--(BUSINESS WIRE)--Jan. 23, 2002

Funding Will Help Catena Enable Mass-Market Deployment

of Broadband DSL Services and Access Network Convergence

Catena Networks today announced that it has raised $75 million in a fourth round of financing, bringing the total invested capital in the company to $192 million. The new funds will help Catena further establish itself as a leading provider of integrated broadband access solutions. These solutions will enable communications service providers to accelerate deployment of broadband DSL services and converge their separate voice and data access networks cost-effectively.

Eleven major investment firms participated in the $75 million fourth round, including new investors J. & W. Seligman & Co., Munder Capital Management and WestAM, and current investors Morgenthaler, Menlo Ventures, Berkeley International Capital, Worldview Technology Partners, The Goldman Sachs Group, Inc., Bessemer Venture Partners, BCE Capital and Silicon Valley BancVentures.

"There is tremendous investor interest in Catena because of our demonstrated ability to sell our solutions to incumbent telecommunications carriers," said Bob Machlin, president and CEO of Catena Networks. "This amount of funding confirms that investors believe there is a large market opportunity for integrated broadband access equipment and that they have confidence in our becoming a major supplier in the broadband access market."

Gary Morgenthaler, general partner at Morgenthaler in Menlo Park, Calif. -- Catena's largest investor -- said, "Catena is changing the playing field in the broadband access market."

Service providers have been challenged to offer high-speed Internet access services to customers served by remote terminals because of power and space limitations and the high costs associated with provisioning such services.

"Catena is the first network infrastructure provider to truly address these issues," Morgenthaler noted. "By integrating Plain Old Telephone Service (POTS) and DSL at the silicon level, Catena's system solutions enable carriers to deliver fully integrated voice and data services to subscribers more quickly, cost-effectively and profitably than ever before."

Frank Dzubeck, president and CEO of Communications Network Architects, a communications industry consultancy based in Washington, D.C., said, "Carriers recognize that Catena's solutions can immediately help them meet today's customer demands and potential, future regulatory demands. At the same time, these solutions meet management demands to reduce the capital and operations costs of deploying DSL in local and remote terminal environments.

"Catena's solutions have the potential of offering service providers the ability to transform DSL into a volume broadband service as ubiquitous and universally available to customers as POTS is today," Dzubeck said.

Frontier, a Citizens Communications Company, and CT Communications -- two large, independent local exchange carriers -- are deploying Catena's CNX-5 Broadband DSL System to accelerate broadband services deployment in their serving areas.

The CNX-5 Broadband DSL System and CN1000 Broadband Loop Carrier, which Frontier began testing in December 2001, are innovative broadband access solutions that will enable the mass-market deployment of broadband DSL services and access network convergence.

Catena's CNX-5 system broadband-enables legacy Lucent SLC-5 Digital Loop Carrier Systems (DLCs). The CNX-5 provides two lines of integrated POTS+DSL, replacing cards that provide two lines of POTS only.

The CN1000 Broadband Loop Carrier is a new class of access system designed for the emerging, packet-based public network. It provides POTS+DSL on every line, enables no-truck-roll remote provisioning and maintenance, and delivers packetized POTS and data traffic to converged networks. The CN1000 integrates the functions of a DSLAM, Digital Loop Carrier System and Media Gateway.

"Catena has all the key ingredients for success," said Ajay Diwan, senior vice president of the Seligman Technology Group, based in Palo Alto, Calif. and New York City. "It has a huge market opportunity and a highly experienced management, engineering, marketing and sales team, as well as breakthrough technology and solutions."

About Catena Networks

Catena Networks, Inc. builds innovative broadband access solutions that are designed to enable incumbent telecommunications carriers to achieve mass-market deployment of plain old telephone service (POTS), and broadband digital subscriber line service (DSL), on a single access line, and to facilitate access network convergence. Headquartered in Redwood Shores, Calif., the company operates world-class research and development facilities in Ottawa, Ontario, Canada and has more than 300 employees across North America. Founded in 1998, Catena is a privately held company that has secured U.S. $192 million in venture financing. For more information, please access www.catena.com.

About J. & W. Seligman & Co.

J. & W. Seligman & Co. Incorporated, a New York-based investment manager and advisor, was founded in 1864. As well as providing management and advisory services to institutional clients, the firm provides a broad array of investments to individuals, including the U.S.-based Seligman Group of Funds with more than 50 portfolios and a range of retirement services. Additionally, it manages Tri-Continental Corporation, the largest publicly traded, diversified closed-end investment company in the United States, and two closed-end municipal bond funds, which are traded on the New York Stock Exchange. Seligman also manages a range of offshore investments available exclusively for non-U.S. investors. J. & W. Seligman & Co. Incorporated has an additional office in Palo Alto, and its affiliates have marketing offices in London, Hong Kong, and Buenos Aires. Additional information about J. & W. Seligman & Co. is available at www.jwseligman.com.

About Morgenthaler

Morgenthaler, a leading venture capital and buyout firm, was founded in 1968. The firm focuses on early-stage technology investments, as well as middle-market management buyouts. It has funded over 180 companies in its 34-year history, including two of the last decade's highest-performing IPOs: Microchip Technology (1993) and Premisys Communications (1995). Current representative portfolio investments in communications include optical and wireless components companies such as Agility Communications, Lightwave Microsystems, and Peregrine Semiconductor, as well as systems companies such as Innovance Networks and TimesTen. With its new $850-million fund raised in August 2001, the firm will have a total of $1.8 billion under management. The firm's Web address is www.morgenthaler.com.

About Munder Capital Management

Munder Capital Management is a leading U.S. money management firm with nearly $50 billion in assets under management, including 34 long-term mutual funds. Founded in 1985, the firm provides investment advisory services to a wide range of clients, including corporations; foundations; charitable trusts; state, municipal and county government retirement plans; insurance companies, unions and individuals. Additional information on the firm and its mutual funds is available on its web site at www.munder.com.

About WestAM

WestAM is a global investment management organization with operations in the United States, Europe, Latin America, Asia, and Australia. The firm's institutional investment management activities began in Dusseldorf, Germany in 1969. Today, WestAM manages approximately $35 billion in investment assets for over 500 clients around the world, including more than $2 billion in private equity assets. WestAM is owned by Westdeutsche Landesbank, one of the largest financial institutions in Europe, with over Euro 400 billion in assets. For more information, please see www.WestAM.com.

This press release contains forward-looking statements as that term is defined in the Private Securities Litigation Reform Act of 1995. These and all forward-looking statements are only predictions or statements of current plans that are constantly under review by the company. Such statements are qualified by important factors that may cause actual results to differ from those contemplated, including changes in industry conditions, rapid changes in technology, and actions of our competitors. The company has no obligation to update or revise these forward-looking statements to reflect the occurrence of future events or circumstances.

Note to Editors: Catena, Catena Networks, and the Catena Networks logo are trademarks of Catena Networks, Inc. All other trademarks or service marks mentioned in this document are the property of their respective owners.