Conexant’s Refinancing Plan

Conexant Systems, Inc. (CNXT) announced a comprehensive refinancing plan designed to improve its balance sheet and address its liquidity needs.

Conexant is offering new 11.25% senior secured notes due 2015 aggregating $175 million. The company is also offering approximately 14 million shares of its common stock.

Management expects that this plan will provide sufficient financial flexibility to refinance its outstanding 4% convertible subordinated notes due 2026.

The proceeds from these offerings along with the available cash will be used to repay the existing convertible subordinated notes of $232 million, which carry an option for bondholders to ask for repayment in March 2011.

Holders of convertible subordinated notes will be offered par value in cash. The tender offer will be contingent upon the successful completion of the new debt and equity offerings which is expected to happen by March 30, 2010.

The new debt and equity offering along with retirement of the existing convertible debt will be the final leg of restructuring activities undertaken by management in the past few quarters. Management expects this refinancing to help the company realize the benefits associated with its business and growth opportunities.

Conexant expects to capture market share with existing designs and deliver new products for imaging, audio, embedded modem and video surveillance applications. In addition, the company also plans to develop its core capabilities in analog markets and use its expertise in analog and mixed-signal design to take advantage of new opportunities in adjacent markets. 

Last year, Conexant sold off its DSL business to streamline its operations and focus on core areas of growth.

Meanwhile, Conexant has also announced that the proposed sale of its 25 acres of property adjacent to its Newport Beach, California headquarters to City Ventures LLC for $26.1 million has been postponed and will not close prior to the end of March 2010 as originally anticipated. City Ventures has asked for concessions that include a price reduction and a financing contingency.

Headquartered in Newport Beach, California, Conexant Systems designs and develops semiconductor solutions that enable consumers to access the digital world.

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