Vitesse Semiconductor Corporation (Nasdaq:VTSS)
announced today that it has entered into a commitment letter for
financing with Tennenbaum Capital Partners.
Under the terms of the letter, Tennenbaum Capital Partners, through one or more affiliates, has agreed initially to lend to Vitesse up to $24 million in the form of a four year, secured note at a LIBOR-based interest rate, and, if requested by Vitesse and subject to the satisfaction of certain conditions, up to an additional $30 million. The net proceeds will be used to fund new product development, repay certain loan amounts and for general corporate purposes. The consummation of the financing is subject to the execution of definitive agreements and the satisfaction of certain conditions, which are anticipated to occur during the week of June 5, 2006.
"We are pleased to have such a substantial financial ally as Tennenbaum. Our customers rely on us for delivering the most innovative technologies with unprecedented performance, integration, reliability, and price. This capital infusion will allow Vitesse to continue to invest in strategic markets and continue to provide customers with the leading edge products and support that they expect from Vitesse," said Chris Gardner, President and CEO for Vitesse. "The company is now entering an exciting new phase of development and leadership. We look forward to working closely with Tennenbaum to further strengthen our presence in the industry."
"Vitesse is a leading provider of innovative products for the communication market. They have a tremendous portfolio of products and IP in some of the fastest growing parts of the market. We are excited about the opportunity to support their strategic initiatives and expect that they will continue to grow and expand their share in the markets they serve. Vitesse is the latest in a series of investments Tennenbaum is making in technology companies and reflects our confidence in Vitesse and our continued interest in technology investing. In addition to our experience investing in technology companies, our resources also include a $4 billion long-term capital base which provides Tennenbaum with the ability to invest a substantial amount of additional capital in Vitesse if the opportunity arises," said Steven Chang, a Partner at Tennenbaum.
Updates from Ethernet, Storage, and Network Products Divisions
The Ethernet Products Division continues its technology leadership position with the introduction of several break-through products that are leading the transition from Fast Ethernet to Gigabit Ethernet (GbE). The SparX(TM) family of Gigabit Ethernet (GbE) switches with integrated copper PHY ports continues to capture significant market share in the SME, entry-level Enterprise, SMB and SOHO switch markets. Further, the company introduced a new family of low cost stackable switches, the E-StaX-34(TM) enabling the high L2 Managed volume market to transition from Fast Ethernet to Gigabit Ethernet at compelling and cost effective price points. Other new advancements include the recent demonstration of the industry's first 400mW GbE PHY, which reduces power consumption by up to 50 percent versus competitive solutions.
With new SAS and Enclosure Management product lines introductions, the Storage Products Division recently achieved its highest volume quarter in 2006. The company debuted its initial production ramp for SAS products, including RAID-On-Chip, Expanders, and Active/Active muxes targeting tier one OEMs. Overall the division's SAS and SATA products continue to experience significant quarter-to-quarter growth.
The Network Products Division is on track to achieve significant milestones with the introduction and production ramp-up of several new product families, including high-speed signal integrity crosspoint switches and fiber-to-the-home based products. Additionally, the division secured many new design wins in the past quarter including several wins for its Ethernet over SONET VersaCAT(TM) Mapper product family which is currently field deployed by the majority tier one OEMs in Multi-Service Provisioning Platforms (MSPPs) and other Ethernet over SONET routers and switches.
Update on Convertible Debentures
Vitesse also announced that it has received a letter from the trustee under the indenture for Vitesse's Convertible Subordinated Debentures due 2024 alleging certain compliance deficiencies with respect to Vitesse's failure to file its Quarterly Report on Form 10-Q for the quarter ended March 31, 2006 and asserting that if the alleged deficiencies are not cured within 60 days, an event of default will occur under the indenture. Vitesse disputes the allegations set forth in the letter from the trustee and will contest any attempt to declare an event of default under the indenture.
About Vitesse
Vitesse designs, develops and markets a diverse portfolio of high-performance, cost-competitive semiconductor solutions for communications and storage networks worldwide. Engineering excellence and dedicated customer service distinguish Vitesse as an industry leader in Gigabit Ethernet LAN, Ethernet-over-SONET, Advanced Switching, Fibre Channel, Serial Attached SCSI, Optical Transport, and other applications. Vitesse innovation empowers customers to deliver superior products for Enterprise, Access, Metro, and Core applications. Additional company and product information is available at www.vitesse.com.
About Tennenbaum Capital Partners
Tennenbaum Capital Partners is a Santa Monica, California-based private investment firm managing over $4 billion in private funds. Tennenbaum focuses on investment opportunities between $50 million to $250 million. The firm's investment strategy is based on a long-term horizon and value-oriented approach. Tennenbaum's core strengths include an in-depth knowledge of equity and debt financing vehicles in the public and private markets with a focus on complex investments such as acquisitions and special situations. For more information, please visit www.tennenbaumcapital.com.
FORWARD LOOKING STATEMENTS
This news announcement contains certain forward-looking statements within the meaning of the U.S. securities laws. These statements are based upon current expectations and involve certain risks and uncertainties, including those related to the expected future operating performance of the Company. Forward-looking statements include but are not limited to information preceded by, or that include the words, "believes", "expects", "prospects", "anticipates", "could", "estimates", "forecasts" or similar expressions. The reader should note that these statements may be impacted by several factors, including economic changes, increased competition, changes in the semiconductor industry generally, and changes in interest rates. Accordingly, the Company's actual performance and results may differ from those anticipated in the forward-looking statements. Please see the Company's recent public filings for information about these and other risks that may affect the Company. The Company undertakes no obligation to update or revise the information contained herein because of new information, future events or otherwise.
Under the terms of the letter, Tennenbaum Capital Partners, through one or more affiliates, has agreed initially to lend to Vitesse up to $24 million in the form of a four year, secured note at a LIBOR-based interest rate, and, if requested by Vitesse and subject to the satisfaction of certain conditions, up to an additional $30 million. The net proceeds will be used to fund new product development, repay certain loan amounts and for general corporate purposes. The consummation of the financing is subject to the execution of definitive agreements and the satisfaction of certain conditions, which are anticipated to occur during the week of June 5, 2006.
"We are pleased to have such a substantial financial ally as Tennenbaum. Our customers rely on us for delivering the most innovative technologies with unprecedented performance, integration, reliability, and price. This capital infusion will allow Vitesse to continue to invest in strategic markets and continue to provide customers with the leading edge products and support that they expect from Vitesse," said Chris Gardner, President and CEO for Vitesse. "The company is now entering an exciting new phase of development and leadership. We look forward to working closely with Tennenbaum to further strengthen our presence in the industry."
"Vitesse is a leading provider of innovative products for the communication market. They have a tremendous portfolio of products and IP in some of the fastest growing parts of the market. We are excited about the opportunity to support their strategic initiatives and expect that they will continue to grow and expand their share in the markets they serve. Vitesse is the latest in a series of investments Tennenbaum is making in technology companies and reflects our confidence in Vitesse and our continued interest in technology investing. In addition to our experience investing in technology companies, our resources also include a $4 billion long-term capital base which provides Tennenbaum with the ability to invest a substantial amount of additional capital in Vitesse if the opportunity arises," said Steven Chang, a Partner at Tennenbaum.
Updates from Ethernet, Storage, and Network Products Divisions
The Ethernet Products Division continues its technology leadership position with the introduction of several break-through products that are leading the transition from Fast Ethernet to Gigabit Ethernet (GbE). The SparX(TM) family of Gigabit Ethernet (GbE) switches with integrated copper PHY ports continues to capture significant market share in the SME, entry-level Enterprise, SMB and SOHO switch markets. Further, the company introduced a new family of low cost stackable switches, the E-StaX-34(TM) enabling the high L2 Managed volume market to transition from Fast Ethernet to Gigabit Ethernet at compelling and cost effective price points. Other new advancements include the recent demonstration of the industry's first 400mW GbE PHY, which reduces power consumption by up to 50 percent versus competitive solutions.
With new SAS and Enclosure Management product lines introductions, the Storage Products Division recently achieved its highest volume quarter in 2006. The company debuted its initial production ramp for SAS products, including RAID-On-Chip, Expanders, and Active/Active muxes targeting tier one OEMs. Overall the division's SAS and SATA products continue to experience significant quarter-to-quarter growth.
The Network Products Division is on track to achieve significant milestones with the introduction and production ramp-up of several new product families, including high-speed signal integrity crosspoint switches and fiber-to-the-home based products. Additionally, the division secured many new design wins in the past quarter including several wins for its Ethernet over SONET VersaCAT(TM) Mapper product family which is currently field deployed by the majority tier one OEMs in Multi-Service Provisioning Platforms (MSPPs) and other Ethernet over SONET routers and switches.
Update on Convertible Debentures
Vitesse also announced that it has received a letter from the trustee under the indenture for Vitesse's Convertible Subordinated Debentures due 2024 alleging certain compliance deficiencies with respect to Vitesse's failure to file its Quarterly Report on Form 10-Q for the quarter ended March 31, 2006 and asserting that if the alleged deficiencies are not cured within 60 days, an event of default will occur under the indenture. Vitesse disputes the allegations set forth in the letter from the trustee and will contest any attempt to declare an event of default under the indenture.
About Vitesse
Vitesse designs, develops and markets a diverse portfolio of high-performance, cost-competitive semiconductor solutions for communications and storage networks worldwide. Engineering excellence and dedicated customer service distinguish Vitesse as an industry leader in Gigabit Ethernet LAN, Ethernet-over-SONET, Advanced Switching, Fibre Channel, Serial Attached SCSI, Optical Transport, and other applications. Vitesse innovation empowers customers to deliver superior products for Enterprise, Access, Metro, and Core applications. Additional company and product information is available at www.vitesse.com.
About Tennenbaum Capital Partners
Tennenbaum Capital Partners is a Santa Monica, California-based private investment firm managing over $4 billion in private funds. Tennenbaum focuses on investment opportunities between $50 million to $250 million. The firm's investment strategy is based on a long-term horizon and value-oriented approach. Tennenbaum's core strengths include an in-depth knowledge of equity and debt financing vehicles in the public and private markets with a focus on complex investments such as acquisitions and special situations. For more information, please visit www.tennenbaumcapital.com.
FORWARD LOOKING STATEMENTS
This news announcement contains certain forward-looking statements within the meaning of the U.S. securities laws. These statements are based upon current expectations and involve certain risks and uncertainties, including those related to the expected future operating performance of the Company. Forward-looking statements include but are not limited to information preceded by, or that include the words, "believes", "expects", "prospects", "anticipates", "could", "estimates", "forecasts" or similar expressions. The reader should note that these statements may be impacted by several factors, including economic changes, increased competition, changes in the semiconductor industry generally, and changes in interest rates. Accordingly, the Company's actual performance and results may differ from those anticipated in the forward-looking statements. Please see the Company's recent public filings for information about these and other risks that may affect the Company. The Company undertakes no obligation to update or revise the information contained herein because of new information, future events or otherwise.
© 2006 Business Wire
