Safeguard Scientifics Announces $47 Million Debt Exchange

Posted by | March 11, 2010

We have spoken frequently with shareholders about our objective to investigate opportunities to restructure, refinance or repay some of our existing 2024 debentures on or before March 2011 as part of our financing strategy. March 2011 is an important date because that is the first date at which some of our debt could potentially need to be repaid.

Today, we announced that we are on track to achieving this objective. Safeguard Scientifics entered into privately negotiated agreements with certain institutional holders of an aggregate of approximately $47 million in face value of its 2.625 percent senior convertible debentures due 2024 to exchange the debentures held by such holders for a like face amount of newly issued 10.125 percent senior convertible debentures, due 2014.

By establishing a 2014 maturity date for the new debentures, we are better matching our long term debt obligations with our exit expectations regarding our partner company interests, our continuing cash deployment plans and other pursuits of ancillary sources of capital. We also feel that the flexibility to settle all or a part of these obligations using stock, cash or combination thereof in the event of a conversion is advantageous to our shareholders in managing potential dilution.

Peter J. Boni, our President and Executive Officer, characterized the exchange transaction as an important element in the continued strengthening of our balance sheet, giving Safeguard enhanced financial flexibility.

The institutions that entered into this exchange agreement received new debentures that will mature in March 2014, bear interest at an annual rate of 10.125 percent and are convertible, subject to certain restrictions, into shares of Safeguard common stock. The effective conversion price per share is $16.50. Upon a conversion of these debentures, the Company has the right to settle the conversion in stock, cash or a combination thereof.

Since 2006, Safeguard has repurchased $71.8 million in face value of the debentures at an average 21 percent discount to face value. Of the original $150 million in debentures issued in 2004, approximately $31 million remains outstanding.

We are working hard to continue to improve the value of Safeguard and believe this transaction is a significant step towards achieving our long term goals.

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