Enablence Technologies announced that it has finalized a US$3.5 million note payable with a California chartered bank, to be used to fund the Company's investment in Sunsea-Enablence Optoelectronics, its new joint venture based in Foshan, China.

The note is said to mature on April 20, 2016 and it bears interest greater than 5.5%, The Wall Street Journal Prime Rate plus 1.5%. Moreover, it is also said to be secured by US$1.2 million of cash on deposit and the shares in the China JV and is repayable at interest only for the first twelve months after which the interest and principal amortized over the remaining term of the loan.

As partial consideration for the loan, the company said that it granted the bank warrants to acquire up to 400,000 common shares of Enablence, at an exercise price of $0.22 per share, expiring April 9, 2013, subject to TSX Venture Exchange approval.

"We are very pleased to have taken this significant step in the creation of the China JV," Tim Thorsteinson, chief executive officer of Enablence said in a press release.

 "We look forward to the set up of operations in China, and a long and profitable relationship," Thorsteinson added.

Enablence is a supplier of optical components and subsystems for access, metro and long-haul markets and fiber-to-the-home equipment and multi-services access platform for triple-play residential and business services.

Earlier in December 2010, Enablence entered into a joint venture with China's SUNSEA Telecommunications Co. Ltd., a move that the company believed to strategically position its Optical Components and Subsystems Division to capitalize on the vast opportunity presented by the Chinese market for broadband telecommunications equipment. The joint venture, to be called Sunsea-Enablence Optoelectronics is expected to commence its operations from July 2011.

As per the terms, the China JV was planned to be created with an initial capital investment of US$18 million, of which Enablence will contribute US$3.5 million in cash and US$1 million in equipment, as well as its market-leading expertise in developing and manufacturing optical components based on its PLC technology. Enablence will hold a 49-percent ownership stake in the joint venture.

The company used US$1.2 million of its recently announced financing to help secure the loan.

Enablence recently revealed that it would continue to explore all strategic alternatives for the most value-enhancing and efficient divestiture of its Systems Division.