Vitesse Semiconductor Corporation (Pink Sheets:VTSS) today announced that it has completed its previously announced sale of a portion of its storage products business to Maxim Integrated Products, Inc. (Pink Sheets:MXIM). Concurrently, Vitesse completed the funding of the previously reported $30 million loan from Whitebox VSC, Ltd. and also paid in full all amounts outstanding under the existing loans from affiliates of Tennenbaum Capital Partners.
“With the closing of these transactions, Vitesse is poised to achieve a leadership position in its core Networking and Ethernet IC market segments,” said Christopher R. Gardner, chief executive officer of Vitesse. “By capitalizing on our strong competitive advantages and utilizing all of our resources — advanced products, technical experts, and stable financials — we are able to support a sustainable and growing business.”
Maxim acquired Vitesse's Serial Attached SCSI (SAS), Serial Attached ATA (SATA) expander product segments, enclosure and baseboard management devices and certain other assets of Vitesse’s Storage Products Division. The products divested accounted for approximately $20 million of Vitesse's consumption during the 12 months ended June 30, 2007. Vitesse will receive approximately $63 million in cash from the sale, along with potential earn-out payments of up to $12 million in the aggregate.
As a result of the divestiture, Vitesse has discontinued its Storage Products Division and anticipates a reduction in operating expenses of approximately $2.5 million per quarter beginning in the quarter ending March 31, 2008. Vitesse will continue to deliver on its commitments to all customers for all retained products that were previously part of the Storage Products Division.
The Whitebox VSC, Ltd. loan has a four-year term, with an option to lend up to an additional $15 million. The loan is secured by substantially all of Vitesse’s assets. Vitesse used approximately $15 million of the proceeds of the debt financing, as well as the proceeds from the sale of the Storage Products assets, to repay the Company's current facility with affiliates of Tennenbaum Capital Partners.
Vitesse designs, develops and markets a diverse portfolio of high-performance, cost-competitive semiconductor solutions for communications networks worldwide. Engineering excellence and dedicated customer service distinguish Vitesse as an industry leader in Gigabit Ethernet LAN, Ethernet-over-SONET, Fibre Channel, 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.
Vitesse is a registered trademark in the United States and/or other jurisdictions of Vitesse Semiconductor Corporation. All other trademarks or registered trademarks mentioned herein are the property of their respective holders.
Statements made in this release that are not historical facts are “forward-looking” statements (as defined in the Private Securities Litigation Reform Act of 1995) that involve risks and uncertainties and are subject to change at any time. These forward-looking statements may include, but are not limited to, statements containing words such as “anticipate,”“believe,” “plan,”“estimate,” “expect,”“hope,” “intend,” and similar expressions. Factors that could cause actual results to differ are identified in the public filings made by Vitesse with the Securities and Exchange Commission and include the fact that we have disclosed that you should not rely upon our published financial statements and the fact that we have not filed all of our reports required by the Securities Exchange Act of 1934. More information on factors that could affect our business and financial results are included in our public filings made with the Securities and Exchange Commission, which are available on the web site of the Securities and Exchange Commission, www.sec.gov.
The forward-looking statements involve known and unknown risks, uncertainties and other factors that are, in some cases, beyond our control. We caution investors that any forward-looking statements made by us are not guarantees of future performance, including, but not limited to, the risks that the recently announced proposed settlement of certain lawsuits against the Company will not be completed or approved by the court, that any court approval will be successfully reversed on appeal, or that the settlement agreement is terminated or cancelled under its terms. We disclaim any obligation to update any such factors or to announce publicly the results of any revisions to any of the forward-looking statements to reflect future events or developments.
Ronda Grech, +1.805.388.3700