Bondholders of Elpida Memory Inc asked a Japanese court to reject Micron Technology Inc’s planned ￥200 billion (US$2.5 billion) takeover of the bankrupt memorychip maker, saying the deal was “severely detrimental.”
The group of bondholders, claiming to represent Japanese and international pension funds, plans to propose an alternative to Micron’s deal announced this month, according to a copy of a filing in Tokyo District Court, a translation of which was submitted on Monday in the US Bankruptcy Court in Wilmington, Delaware. Elpida filed for bankruptcy protection in February.
Micron agreed to buy Elpida in a deal that would double the US company’s share of the global market for DRAM, the most widely used memory chips in personal computers, to about 24 percent. The deal would help Micron vie with industry leader Samsung Electronics Co, while giving it greater control over supply gluts that have caused it to report losses amid falling prices.
“The creditors cannot be compelled to accept a Micron transaction that produces a recovery below that which would result from a liquidation of the estate,” the bondholders said.
“It would be difficult for bondholders to scuttle the deal,” said Koji Ishikawa, a lawyer at DLA Piper in Tokyo, who isn’t involved in the case.
Still, “there may be room for negotiation if bonds are privately placed and have veto provisions,” he said.
Micron agreed to pay ￥60 billion in cash at the closing of the deal, while the remaining ￥140 billion in future annual installments through 2019 will come from cash flow generated by Micron’s payments for chips made by Elpida, according to a July 2 statement.
Micron, the largest US maker of computer memory, won approval from the Tokyo District Court in May to negotiate to buy Elpida’s entire business after the Japanese company held two rounds of bidding. The July 2 agreement is subject to approval by the Tokyo court, which Elpida said it will seek next month. Creditors must also approve the agreement. The companies plan to complete the sale in the first half of next year.
In a related transaction, Micron also agreed earlier this month to buy Taiwan-based Powerchip Technology Corp’s (力晶科技) 24 percent stake in Rexchip Electronics Corp (瑞晶) for about NT$10 billion (US$334 million). The deal will give Micron control of manufacturing facilities that will boost its output by about 200,000 silicon wafers per month, or 50 percent.