Brocade Announces Pricing of $600 Million Senior Secured Notes

Brocade Communications Systems, Inc. announced the pricing of its offering of $300 million in aggregate principal amount of 6.625% senior secured notes that will mature in 2018 at an issue price of 99.239% of the principal amount of the notes, and $300 million in aggregate principal amount of 6.875% senior secured notes that will mature in 2020 at an issue price of 99.114% of the principal amount of the notes.

The notes will be offered in a private placement to ‘qualified institutional buyers’ in the United States defined in Rule 144A under the Securities Act of 1933, as amended, and outside the United States pursuant to Regulation S under the Securities Act. The notes will be secured, senior obligations of the company. The sale of the notes is expected to close on or about January 20, 2010.

Brocade intends to use up to $150 million of the net proceeds of the offering, together with cash on hand, to retire when due in February 2010 approximately $173 million in outstanding 2.25% subordinated convertible notes originally issued by McDATA Corporation, a wholly-owned subsidiary of Brocade. Brocade also intends to use the balance of the net proceeds of the offering to pay down a substantial portion of the outstanding term loan under the Company’s senior secured credit facility, which has a minimum interest rate of 7.0%.