Spansion, the world's largest pure-play provider of Flash memory solutions which used to belong to Advanced Micro Devices, has filed petition for reorganization under chapter 11 of the U.S. Bankruptcy Code as part of its strategy to strengthen its financial position and focus for long-term success. The company's strategic plan is designed to restructure its debt obligations and intensify its focus on market segments with greater profit potential.
“Given our focus on Spansion's future, management and the Board have concluded that chapter 11 provides the most effective means for Spansion to preserve its business, meet its post-petition obligations and maintain customer confidence and continuity while we complete this restructuring. At the same time we will continue to explore opportunities for a strategic transaction to ensure that we are doing all we can to maximize value for our stakeholders,” said president and chief executive officer John Kispert.
The decision to seek chapter 11 protection was made in consultation with an ad hoc consortium of holders of Spansion's $625 million Senior Secured Floating Rate Notes due 2013. Spansion continues to be actively engaged in constructive discussions with this ad hoc consortium for the development of a plan of reorganization that would permit Spansion to emerge quickly from chapter 11 in a stronger financial and competitive position and for the continued exploration of multiple proposals from multiple parties seeking a strategic transaction.
The company believes that its current and anticipated cash resources will be sufficient to pay its expenses and maintain its business operations while it explores and implements options to address its long-term cash needs. Among other things, the company is in discussion with the ad hoc consortium about providing a debtor-in-possession (DIP) credit facility, while also simultaneously pursuing other options intended to provide the company with additional liquidity for its long-term cash needs.
Spansion emphasized that it intends to maintain customer service throughout the reorganization.
Spansion also said it plans to align its business to focus on products and segments in the embedded, IP solutions and wireless markets that have the highest profit potential.
“By focusing on embedded Flash memory products, IP solutions, and the profitable portions of the wireless segment, we believe Spansion can leverage its diverse product portfolio and customer relationships while we continue our restructuring process and explore opportunities for a strategic transaction,” Mr. Kispert.