Bloomberg News

Elpida Files Opposition to Bondholders Move to Stop Micron Sale

September 04, 2012

Elpida Memory Inc., the bankrupt Japanese chipmaker, said it opposes moves by a group of bondholders to block its sale to Micron Technology Inc. (MU:US) because it would interfere with an “entirely fair” reorganization.

The bondholders have not presented any basis for changing terms of the sale and are attempting to “interfere with the reorganization process and sponsorship arrangement” with Micron, Elpida said in its filing to the U.S. Bankruptcy Court in Delaware Aug. 30. Tadashi Shiokai at Ashton Consulting, who works as a spokesman of the bondholders, declined to comment on the Elpida filing.

Elpida is willing to share information with the bondholders, while the group canceled a July 10 meeting and hasn’t sought to reschedule, the Tokyo-based chipmaker said. Micron agreed to buy Elpida in July in a deal that may help the U.S. company vie with industry leader Samsung Electronics Co. while giving it greater control over supply gluts that have caused it to report losses (MU:US) amid falling prices.

Elpida, Japan’s biggest maker of dynamic-random-access memory chips, filed a Chapter 15 petition in U.S. Bankruptcy Court in March, a month after filing bankruptcy at home.

Bondholders Demand

Bondholders owning $293 million in bonds, including Linden Advisors LP and Owl Creek Asset Management LP, filed a motion on Aug. 10, asking the bankruptcy judge to modify the sale because it was for less than Elpida’s liquidation value.

Elpida’s Chapter 15 petition should be modified so the agreement with Micron doesn’t become “an illegitimate transfer of enterprise value from old equity to new equity at the expense of existing creditors,” according to the filing.

In April the U.S. court recognized Japan as home to the so- called foreign main proceeding. As a result, the court in Japan ordinarily would administer the sale of the business and distributions to creditors, receiving assistance from the U.S. court if necessary.

Bondholders are also trying to stop the sale in court in Japan. They told a Tokyo court on Aug. 14 that Micron’s takeover offer of 200 billion yen ($2.6 billion) for Elpida is too low.

The offer is fair to Elpida shareholders, Mark Durcan, chief executive officer of Boise, Idaho-based Micron, said Aug. 13.

The U.S. case is In re Elpida Memory Inc., 12-10947, U.S. Bankruptcy Court, District of Delaware (Wilmington).

To contact the reporters on this story: Naoko Fujimura in Tokyo at nfujimura@bloomberg.net; Takashi Amano in Tokyo at tamano6@bloomberg.net

To contact the editor responsible for this story: Michael Tighe at mtighe4@bloomberg.net


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