Conexant Offers 7 Million Shares

Conexant Systems (CNXT - Snapshot Report) announced that it will offer seven million shares of its common stock in an underwritten public offering. The company also stated that it would grant Oppenheimer & Co Inc, the underwriter for the offering, a 30-day option to purchase up to 1.05 million additional shares to cover over-allotments. The company plans to use the net proceeds of the offering for general corporate purposes which include repaying, redeeming, or repurchasing existing debt, and for working capital, capital expenditures, and acquisitions.

Headquartered in Newport Beach, CA, Conexant Systems designs and develops semiconductor solutions that enable consumers to access the digital world. It operates in an intensely competitive market with many rivals in and outside the United States, including Analog Devices (ADI - Analyst Report), Broadcom Corp. (BRCM - Analyst Report) and Texas Instruments (TXN - Analyst Report).

Last month, Conexant sold its Broadband Access product lines to Ikanos Communications Inc. for $54 million. Management has stated that the company will use all proceeds to strengthen its balance sheet by retiring debt. Conexant had already announced plans to retire $80 million aggregate principal amount of floating rate senior secured notes due in November 2010. It will commence a tender offer for $73 million notes and intends to buy an additional $7 million of the notes.

As a result of this retirement of debt, Conexant will reduce its annual interest burden by more than $5 million. As of July 3, 2009, Conexant had a total debt of $422.1 million and cash and equivalents of $123.4 million. While Conexant continues to face challenges with eroding sales in WLAN, a flattening ADSL market and declining revenue in its modem business, new management is making drastic changes to overhaul the company’s strategic positioning and return to profitability.