Transwitch plans to retire 4.5% convertibles at next week's maturity; sees options for debt due in 2007

By Rebecca Melvin

Princeton, N.J., Sept.8 - TranSwitch Corp. will pay off its 4.50% convertible bonds when they come due on Monday, thereby retiring $25 million, or 24% of its total $105 million of debt on its balance sheet at the end of the second quarter, chief financial officer Peter Tallian said Thursday.

"The logical choice is to retire that debt when it comes due using available cash," Tallian told analysts and institutional investors at the Silicon Valley Bank Tech Investor Forum in San Francisco.

Transwitch had $123 million in cash available on its balance sheet as of June 30.

Despite the fact that Transwitch has withdrawn its registration statement to make an exchange offer for the remaining $80 to $85 million of debt that is due in two years, Tallian said that the company has been disciplined in managing its expense line and cash, and it will continue to be so.

Shelton, Conn.-based Transwitch, which designs, develops and markets semiconductors for voice, data and video communications, announced after the closing bell on Wednesday that it has requested approval from the Securities and Exchange Commission to withdraw its registration statement on Form S-4, originally filed June 17.

The statement covered TranSwitch's previously announced exchange offer for its outstanding 5.45% Plus Cash notes due Sept. 30, 2007.

The designer of mixed-signal semiconductors said it decided to withdraw its registration statement because it couldn't reconcile differing standards established by the SEC for certain exchange offers and by the Nasdaq National Market regarding the listing of additional shares.

The regulatory disagreement between the Nasdaq and the SEC that couldn't be resolved, Tallian said.

In outlining how the company has already reduced debt by 75% to $105 million at the end of the second quarter, from $460 million in the first quarter of 2001, Tallian mentioned a buyback of $145 million of debt in 2001, a Dutch tender for $200 million in debt in 2002, an exchange of notes in 2003, and a swap of debt to equity in 2004.

He said the investment phase of the company is behind it.

He told listeners that Transwitch will remain focused on its specific markets as a technology enabler, and that the company sees as positive the fact that one-third of its revenue for the second quarter was from new products.

Regarding its remaining debt, Tallian said "there are lots of possibilities ahead of us" when the debt is due two years from now.

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