Safeguard Scientifics Repurchases $46.9 Million of 10.125% Convertible Senior Debentures Due 2014

Safeguard Scientifics

, a holding company that builds value in growth-stage life sciences and technology companies, today announced that the Company has repurchased essentially all of the $46.9 million in face value of its previously outstanding 10.125% convertible senior debentures due 2014 (the “2014 Debentures”) (CUSIP 786449AH1). In addition, the Company consummated its previously announced private placement of 5.25% convertible senior debentures due 2018 (the “2018 Debentures”). The initial purchaser in the private placement exercised its option to purchase additional debentures bringing the total gross proceeds to $55.0 million. Proceeds from the offering of the 2018 Debentures were used to repurchase the 2014 Debentures. “These transactions strengthen our long-term financial position by retiring higher-cost, lower conversion price debt, thereby reducing potential dilution and lowering annual interest payments by approximately $1.9 million,” said Stephen T. Zarrilli, President and Chief Executive Officer at Safeguard. The 2014 Debentures were repurchased at a price as a percentage of face value of 125.25, plus accrued interest, for a total cost of $59.5 million. After these transactions, Safeguard's outstanding long-term debt will be $55.5 million in face value. Issued in March 2010, the 2014 Debentures were convertible into shares of Safeguard common stock, cash or a combination of stock and cash at an initial conversion rate of approximately 60.6 shares per $1,000 principal amount, equivalent to a conversion price of approximately $16.50 per share of Safeguard common stock. The 2018 Debentures (CUSIP 786449AJ7) are convertible into shares, cash or a combination of stock and cash at an initial conversion rate of 55.17 shares of Safeguard common stock per $1,000 of principal amount, or an initial conversion price of approximately $18.13 per share. “The 2018 Debentures allow Safeguard to satisfy any conversion with cash and/or stock at our option, retaining maximum financial flexibility,” Zarrilli continued. “We believe we are even more strongly positioned as a result of these transactions. By creating this greater financial flexibility, we can be aggressive as our deal teams identify opportunities to expand the number of Safeguard's partner companies. These transactions do not change our game plan with respect to our core business—to deploy equity capital in certain types of life science and technology companies. Our target deployment range is $5 to $15 million of initial capital per partner company, with appropriate reserves for follow-on funding.” Stifel Nicolaus Weisel acted as the Company's exclusive financial advisor in connection with the transactions. Neither the 2018 Debentures nor the shares of common stock issuable upon conversion of the 2018 Debentures have been registered under the Securities Act of 1933, as amended (“Securities Act”), or the securities laws of any other jurisdiction, and may not be offered or sold in the United States or to U.S. persons absent registration or an applicable exemption from the registration requirements. The offering of the 2018 Debentures was made only to qualified institutional buyers in accordance with Rule 144A under the Securities Act. This press release shall not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any jurisdiction.