Acceleration of convertible subordinate debenture rejected
Vitesse believes that it is not in default with respect to the Debentures and, therefore, any attempt to accelerate the payment of the Debentures is invalid. Negotiations to resolve the dispute continue with a majority of the holders of the Debentures, who have agreed to instruct the Trustee to forbear from taking any further action with respect to the Debentures for a period of 14 days. As previously disclosed, the trustee with respect to the Debentures essentially has asserted that a default occurred when Vitesse failed to make its SEC filings on time. Vitesse believes that it has fully complied with its obligations under the indenture for the Debentures and that there is no requirement in that indenture for Vitesse to make its SEC filings in a timely fashion. Thus, Vitesse rejected the trustee's purported notice of default on May 26, 2006, and rejects the trustee's attempt to accelerate payment of the Debentures.Though Vitesse does not believe there has been a default with respect to the Debentures, it continues to negotiate a resolution with the holders of a majority of the Debentures to avoid the potential costs and uncertainties of a protracted dispute.
"We are disappointed by the decision of the Debenture holders to attempt to accelerate the debt," said Chris Gardner, the CEO of Vitesse. "Vitesse made a good faith offer to resolve this dispute. Unfortunately, the demands by some of the holders of the Debentures have far exceeded anything that we would consider reasonable under the circumstances. We continue to negotiate in good faith for a resolution to this issue, but as we have said, we will not accept a negotiated settlement if we feel it unfair to Vitesse or to our shareholders."