Peregrine Completes Refunding

Integrated circuit (IC) firm Peregrine Semiconductor Corp. has raised a further $7.5 million in the third and final tranche of its $23 million Series A1 recapitalization round -- money it hopes will enable it to become cash flow positive by the end of 2003 (see Peregrine Snatches $23M.

This cash, from Technology Venture Partners LP and Australasian Media and Communications Fund, follows the $14 million the firm raised in August 2002 (see Peregrine Semi Gets $14M). The company, best known for its Ultra Thin Silicon (UTSi) CMOS wafer fabrication process that produces high-speed, low-cost integrated circuits, says the recapitalization was necessary to change its equity structure and help attract more investors.

The financial restructuring has been accompanied by a reduction in staff (from about 180 to 120) and a new strategy that lessens Peregrine's reliance on the wireless network market, says president and CEO Jim Cable [ed. note: grand name for the head of a wireless company, eh?]. “A year ago most of our products were targeting the cellular infrastructure market, but it’s a brutal place to be right now so we made a concerted effort to get into other sectors,” he says, pointing to the cable and satellite markets, as well as wireless handsets, as new targets. The company is already a player in the optical components sector, and, although diversifying, still sees wireless network vendors as key customers. Its current client list includes LM Ericsson (Nasdaq: ERICY), Nortel Networks Corp. (NYSE/Toronto: NT), and Qualcomm Inc. (Nasdaq: QCOM).

Cable [ed. note: tee hee] says the company's R&D efforts will be increasingly weighted towards the handset business, rather than the traditional network infrastructure market, in the future.

Whatever the market, Peregrine's Ultra Thin Silicon technique remains its key to success. “UTSi provides a number of advantages specifically of interest for RF wireless applications,” says Mark Christensen, senior consultant at Prismark Partners LLC. “As long as the technology works and they can convince companies of its capability, I see a bright future for them.” So what does Cable plan to with the new funding? Impersonate Ebenezer Scrooge, by the sound of it. “We are being ever so prudent with this cash -- all my focus is on being cash-flow positive by the end of this year. Just because I have this additional money doesn’t mean I am going to spend it. I am going to keep most of this latest tranche in the bank,” he says, wringing his hands together and gurning wildly. So don't get caught at the bar with Cable at the next tradeshow, because his wallet'll be at home.

The few pennies that Cable will have to spend will help fund Peregrine's system-on-a-chip developments with Oki Electric Industry Co. Ltd. (see Oki, Peregrine Team on LSIs) and steer it towards financial security. "We are not going to have to raise any more money. Besides, if we do, it will be another CEO that has to do it. You can read into that what you will.” Well, sounds to us like Cable will be spending more time with his gardening tool set if the company goes a-thumping on VC doors again.

— Justin Springham, Senior Editor, Europe, Unstrung
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