Getting Module not found errors when using pubnub-angular2 with angular cli v 1.7.0-rc.0

[abeymg]

Repro steps

Step 1:
Upgrade an angular project using cli version 1.6.1 to cli 1.7.0-rc.0. App uses the pubnub-angular2 lib v 1.3.0

Step 2:
ng serve the app OR alternatively ng test any specs that make use the pubnub angular service.

Observed behavior
Getting a bunch of Module not found error e.g.

ERROR in ./node_modules/pac-proxy-agent/node_modules/socks-proxy-agent/index.js
Module not found: Error: Can't resolve 'dns' in '/Users/ag/proj/node_modules/pac-proxy-agent/node_modules/socks-proxy-agent'
ERROR in ./node_modules/pac-resolver/dnsResolve.js
Module not found: Error: Can't resolve 'dns' in '/Users/ag/proj/node_modules/pac-resolver'
ERROR in ./node_modules/pac-resolver/isInNet.js
Module not found: Error: Can't resolve 'dns' in '/Users/ag/proj/node_modules/pac-resolver'
ERROR in ./node_modules/pac-resolver/isResolvable.js
Module not found: Error: Can't resolve 'dns' in '/Users/ag/proj/node_modules/pac-resolver'
ERROR in ./node_modules/socks-proxy-agent/socks-proxy-agent.js
Module not found: Error: Can't resolve 'dns' in '/Users/ag/proj/node_modules/socks-proxy-agent'