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Pulse Electronics Corporation Announces Convertible Note Exchange Transactions

Stocks in this article: PULS

Pulse Electronics Corporation (NYSE:PULS), a leading provider of electronic components, today announced it has reached agreements with the holders of approximately $20.7 million of the company’s $22.3 million outstanding 7% convertible senior notes due 2014 to exchange their notes for various combinations of the company’s existing Term B Loan, newly issued common stock, and cash. The exchange transactions will reduce the company’s outstanding debt and the amount of cash required for debt service and will extend the maturity of the exchanged debt beyond 2014, allowing the company to further focus on its long term strategy and the execution of its business plans.

The company has also reached agreement with certain affiliates of investment funds managed by Oaktree Capital Management L.P. (“Oaktree”), to convert all its holdings of the company’s Series A preferred stock to common stock immediately in connection with the closing of the exchange transactions.

In relation to Oaktree’s increased common stock ownership, the company agreed to increase the size of its board of directors from seven to nine members and to appoint three Oaktree designees to the board upon closing of the transactions.

“I am very pleased that the noteholders have accepted Pulse’s exchange offers,” said Pulse Chairman and Chief Executive Officer Ralph Faison. “We believe these exchange transactions represent the best possible outcome for all stakeholders and put our immediate financing issues behind us, allowing Pulse to look to the future as we build on our operational improvements and focus on opportunities to grow our business.

“The exchange transactions immediately reduce our debt by nearly $5 million and extend the maturity of the exchanged debt to 2017,” Mr. Faison continued. “We achieved this with significantly less dilution of our existing shareholders than we originally illustrated, and they will retain a significantly greater share of total equity than the maximum dilution that was contemplated at the original refinancing in 2012. Further, the transactions enable Oaktree to convert their preferred stock into common stock at the ratio we envisioned in 2012, which we believe will clarify the ultimate capital structure of the company.

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