Conexant Systems Inc. plans to move its headquarters from its longtime Newport Beach home to a smaller location in Irvine.
The chipmaker, which filed for bankruptcy protection in late February, said in court filings that it plans to move its headquarters and local operations to 1901 Main St. The eight-story building is at Main Street and MacArthur Boulevard near John Wayne Airport.
Conexant plans to occupy about 45,000 square feet of the 172,000-square-foot building, which is owned by Johns Creek, Ga.-based Piedmont Office Realty Trust Inc.
The Irvine office is a little more than two miles away from Conexant’s current home at the two-building 4000 MacArthur office complex near the Newport Beach-Irvine line. Conexant has long had its headquarters at the 10-story west tower at 4000 MacArthur, located at Jamboree Road and MacArthur, and it has its name atop the nearly 187,000-square-foot building.
Fellow chipmaker Mindspeed Technologies Inc. is headquartered in the east tower of the complex, which is part of the Koll Center Newport development.
Conexant said it currently occupies only two floors of the west tower, although it has a lease for nearly the entire property. About half of the building is subleased to other tenants, with the remainder unoccupied.
The chipmaker is looking to use the court-overseen bankruptcy reorganization to get out of its current headquarters lease, which expires in 2015, along with leases for other buildings in Orange County and San Diego.
Conexant said in court filings that it loses about $2.3 million a year as a result of the empty space at its headquarters, combined with the difference between the rates it pays for its space and what it collects from the subleases.
Conexant’s net payments on “dead leases” have consumed more than 20% of the company’s cash on hand since 2011, according to the company.
It filed for Chapter 11 bankruptcy protection on Feb. 28 after years of falling sales and mounting debt.
Conexant listed assets of $212.7 million and liabilities of about $250 million at the time of the prepackaged bankruptcy filing, which has the approval of its sole secured lender, QP SFM Capital Holdings Ltd., a unit of billionaire George Soros’ New York-based hedge fund, Soros Fund Management LLC.
“Fresh Start”
The move to a new headquarters and other cost-cutting steps “will provide Conexant with a true ‘fresh start,’ leaving behind the ‘past,’ which the debtors believe will significantly improve the morale of their workforce,” the company said in a recent filing in Delaware’s federal bankruptcy court.
About 120 Conexant employees will make the move to the Irvine office, which will house the company’s project management, finance and administrative services, human resources, and research and development.
The new lease, which is slated to run for
7 ½ years with monthly rents ranging from $1.95 to $2.30 per square foot, will include lab space built for product testing, according to court documents.
The relocation to Irvine could take place by the end of the month if Conexant receives bankruptcy court approval for the new lease, as well as approval for the rejection of the lease at its current headquarters.
The 4000 MacArthur complex is owned by Emmes Group of Cos., and the New York-based real estate investor appears to have been making plans for life without Conexant as a major tenant since at least September, when it began marketing the entire west tower for lease.
The thought at the time was that Conexant might consider relocating its slimmed-down operations to the east tower at the complex, leaving its old headquarters open for a larger tenant to take over.
Conexant said in court filings that it was unable to renegotiate the lease for its current headquarters with the landlord, with the last discussions taking place on March 26.
Jones Lang LaSalle
The Irvine office of Jones Lang LaSalle recently got the leasing assignment for the entire 4000 MacArthur office complex, which Emmes acquired in 2011 in a deal valued at about $94 million.
The brokerage said it has immediate availability at the complex for users needing between 5,000 square feet and 285,000 square feet. Jay Nugent, George Thomson and Andy White have the listing for Jones Lang LaSalle.
Mindspeed leases about 88,000 square feet at 4000 MacArthur’s east tower, which CoStar Group Inc. lists as about 65% occupied.
The lobby and other parts of the east tower got a makeover last year, and Emmes plans
to make similar improvements to the west tower this year, according to Jones Lang LaSalle.
