Once a giant, Conexant files for Chapter 11 [The Orange County Register]
(Orange County Register (CA) Via Acquire Media NewsEdge) March 01--Conexant Systems Inc., once one of Orange County's biggest chipmakers, filed for Chapter 11 bankruptcy protection Thursday in Delaware under a plan to reorganize the company to eliminate debt and cut real estate expenses.
In the bankruptcy filing, the Newport Beach company listed $212.7 million in assets and about $250 million in liabilities, according to Bloomberg News.
Under a restructuring plan, a unit of billionaire George Soros' New York-based Soros Fund Management will exchange $195 million in debt for new stock and a $76 million unsecured note. The unit, QP SFM Capital Holdings, is Conexant's sole secured lender.
Eastman Kodak Co., listed as Conexant's largest unsecured creditor, is owed $2.83 million, and Silterra Malaysia is owed $1.98 million.
"Our pre-arranged financial restructuring provides for a clear path to renewed growth and success, and upon emergence, Conexant will be a leaner company with a stronger balance sheet that allows for a more focused and consistent investment in product lines," said CEO and President Sailesh Chittipeddi.
Conexant was acquired by Golden Gate Capital in San Francisco in 2011. The company has 420 employees worldwide with 170 in California, a fraction of its workforce a decade ago. About 30 employees work in San Diego and the rest in Newport Beach.
The semiconductor unit, which makes chips for imaging, audio, modem and video applications, was spun off from Rockwell International in 1998 and had 6,300 employees.
Conexant, once was a rival of Broadcom Corp. in Irvine, grew to 8,000 people worldwide including 2,600 in Orange County in 2000. But the Newport Beach chipmaker ran into hard times when sales slowed for its modems, wireless telephones and personal computing products.
In 2002, Conexant announced it was phasing out health benefits for 700 people who retired when the company was spun off from Rockwell because it could no longer afford the costs. By that time, the company had shrunk to 1,400 workers.
Meanwhile, the company began spinning off parts of its business including its chip-fabrication unit, which became Jazz Semiconductor (now TowerJazz), and its Internet-networking chip unit, which became Mindspeed Technologies.
Hoping to boost sales, Conexant bought chipmaker GlobespanVirata in 2003 and moved the headquarters to that company's base in Red Bank, N.J. Conexant Chief Executive Dwight Decker, who had headed the Orange County chipmaker since the Rockwell spinoff, stepped down to become chairman.
But the company's financial performance continued to deteriorate. Decker returned to the helm nine months later as chief executive and executive chairman and announced the headquarters would return to Newport Beach. Decker retired in 2008.
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