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Mindspeed Offering Shores Up Co. Cash

Newport Beach-based networking chipmaker Mindspeed Technologies Inc. has tagged its $32 million debt offering for general corporate purposes, which could range from debt reduction and administrative expenses to possible acquisitions, investments or expansion.

The move nearly doubles Mindspeed’s cash position, strengthens its balance sheet and better positions the company to meet other debt obligations, according to Kevin Trosian, vice president of business development and investor relations.

“It gives us more flexibility,” Trosian said. “It can be used for anything.”

Mindspeed now has about $62 million in cash reserves.

Some of the proceeds from the sale of the convertible notes may be used to pay down a current $15 million convertible note that’s set to mature in August 2013, Trosian said.

Convertible Notes

The convertible notes, sold last month, carry an annual interest rate of 6.75% and mature in June 2017 and are convertible at $3.90 per common share. Mindspeed shares were trading around $2.90 last week for a market value of about $104 million.

Convertible notes provide a way for companies to raise money while minimizing dilution for shareholders.

“It’s always easier to raise cash when you don’t need it than when you do,” Trosian said.

Mindspeed makes chips for routers, switches and other networking gear.

The move to shore up cash at Mindspeed follows a downsizing of its corporate headquarters and roughly 25 job cuts.

Restructuring

That was part of a restructuring following the company’s January acquisition of U.K.-based Picochip Ltd. for $51.8 million and up to $25 million in additional benchmark payments.

Mindspeed financed the Picochip acquisition with a mix of a term loan and a traditional line of credit.

Picochip makes systems-on-a-chip for small cellular base stations, which form a fast-growing market amid the race for 4G supremacy among wireless carriers. Such base stations help increase network density and improve coverage to help wireless carriers deal with soaring traffic and data loads from the spread

of smart phones, tablets and other mobile devices.

New Lease

Mindspeed in April signed a new lease with New York-based landlord Emmes Group of Cos. for 88,160 square feet to run through the end of 2019. It had occupied 97,000 square feet at the complex, situated near MacArthur Boulevard and Jamboree Road.

The company is in the midst of a strategic shift to develop comprehensive systems for manufacturers and infrastructure, as evidenced by its May partnership with Hong Kong-based China Mobile Ltd., the world’s largest wireless carrier.

Mindspeed is supporting the company’s aggressive expansion plan to deploy thousands of small base stations across the country to improve China’s taxed communications infrastructure.

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