Pulse to exchange debt, cash, stock for $20.7 million 7% convertibles

By Angela McDaniels

Tacoma, Wash., Feb. 21 - Pulse Electronics Corp. will exchange $20.7 million, or 93%, of its $22.3 million outstanding 7% convertible senior notes due 2014 under individual agreements reached with their holders, according to an 8-K filing with the Securities and Exchange Commission.

The holders agreed to exchange their convertibles for various combinations of the company's existing term loan B due 2017, newly issued common stock and cash.

In total, the company will issue $14,882,000 of new debt under its term loan B and 1,107,400 shares of common stock and pay $2,136,000 in cash.

The company believes the pursuit of separate agreements allowed for greater flexibility in the types of consideration offered and a higher likelihood of success than could have been achieved through a single public exchange offer.

"The exchange transactions immediately reduce our debt by nearly $5 million and extend the maturity of the exchanged debt to 2017," Pulse chairman and chief executive officer Ralph Faison said in a company news release.

The holders who agreed to exchange are Angelo Gordon & Co., LP, Cannell Capital LLC, Harber Capital, LLC, Oppenheimer & Co. Inc. and Wolverine Flagship Fund Trading Ltd.

Term loan B

The new term loan B debt will have the same terms as the $28.5 million term loan B issued in the company's refinancing transaction with Oaktree Capital Management, LP in November 2012.

The interest rate is 10% and, at the company's election, is payable in kind through Nov. 20, 2015.

The term loan B is secured by a first-priority lien on the shares and assets of some domestic and international subsidiaries.

The loan is non-amortizing and may be prepaid without any penalty; however, it may not be repaid until the company's $75 million term loan A is paid in full. Both the term loan A and term loan B mature in 2017.

San Diego-based Pulse makes precision-engineered electronic components and modules.

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