UTStarcom gets additional default notice for 0.875% convertibles

By Jennifer Chiou

New York, Oct. 19 - UTStarcom, Inc. said it received a notice of default from indenture trustee U.S. Bank NA for its 0.875% convertible subordinated notes due 2008.

The purported defaults are related to the company's failure to file with the Securities and Exchange Commission its 10-Qs for the quarters ended March 31 and June 30 as well as failure to deliver the officer's certificate of compliance.

As previously disclosed, UTStarcom has not yet filed with the SEC its 10-Q for the quarter ended Sept. 30, 2006 or its 10-K for the fiscal year ended Dec. 31, 2006.

On July 27, UTStarcom said it entered into a second supplemental indenture, adding that it modified the terms of its consent solicitation on July 25 so that any waiver of defaults received would remain effective only through Oct. 15.

The Alameda, Calif., networking company was soliciting consents for a proposed waiver to any default that may have occurred due to its failure to file its financial statements with the SEC and the trustee on time.

As already reported, the modified amendments also provided that, in addition to regularly scheduled interest payments, the notes would accrue special interest at a rate of 10% per year, which was an increase of 3.25% over the then-current rate of 6.75% per year.

Originally, the company was offering to increase the special interest rate to 9.25% per year.

The company had needed consents from holders of a majority of notes.

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