Aether Systems to tender for $154.9 million 6% convertibles when sale of transportation business closes

New York, Aug. 9 - Aether Systems Inc. said it plans to tender for all its $154.9 million of outstanding 6% convertible subordinated notes due March 2005 at par when it closes on the sale of its transportation business.

The offer will begin promptly after closing of the sale and noteholders will have 45 days to accept, according to a 10-Q filing with the Securities and Exchange Commission.

Funding for the redemption will come from available cash raised from Aether's recent sale of its mortgage-backed securities portfolio.

Holders will also receive accrued interest.

Any convertibles not tendered will remain outstanding and will be repaid at maturity.

Aether's sale of its transportation business to Platinum Equity Capital Partners LP for $25 million in cash is part of the Owings Mill, Md., company's plan to change from a wireless data company to one that manages a leveraged portfolio of mortgage-backed securities.

In January 2004, Aether sold its enterprise mobility solutions segment, which had been its largest business.

In addition to the sale of the transportation business - which accounts for most of its current revenue - Aether is also looking to sell its mobile government operations.

Aether explained that the change in direction is consistent with its goals of becoming profitable as quickly as possible and enhancing the value of its assets for stockholders.

"Our existing businesses have not generated a profit and will require significant ongoing investment if they are to remain competitive and have the opportunity to achieve profitability," the company said in the 10-Q.

Aether also has $760.7 million of federal net operating losses it can use to reduce future tax bills and $193.4 million of capital losses.

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