by Anton Shilov
10/31/2012 | 11:20 PM
The Tokyo District Court court has approved acquisition of insolvent Elpida Memory by rival Micron Technology. The court rejected alternative proposals by numerous creditors of the memory maker, who said that the price Micron would pay for the assets and patents of Elpida was too low.
“With respect to the proposed reorganization plan submitted separately by a certain bondholder, the Tokyo District Court made an order as of October 31, 2012 not to refer it to a resolution. Accordingly, only the proposed reorganization plan submitted by [Elpida] will be refer to a resolution in the reorganization proceedings,” a statement by Micron reads.
The court said that creditors or Elpida must vote on the reorganization plan, which involves acquisition of Elpida and Rexchip Semiconductor by Micron, by February 26, 2012.
Under the agreement Elpida and Micron signed earlier this year, the latter will pay creditors of the former ¥200 billion (approximately $2.5 billion) total consideration, of which ¥60 billion (~$750 million) are to be paid in cash at closing, whereas, another ¥140 billion (~$1.75 billion) will be paid in future annual installment payments through 2019 from cash flow generated from Micron’s payment for foundry services provided by Elpida, as a Micron subsidiary.
Certain creditors of Elpida said that not only $2.5 billion was too low price for Elpida, considering the fact that they will only get about $750 million for the company's equity, whereas 24% share of Rexchip Semiconductor will be acquired by Micron for $334 million, but the annual installment payments are subject to certain conditions and may never be paid.
Micron applauded the Tokyo District Court's order approving the submission of Elpida Memory's reorganization plan to creditors as part of Elpida's corporate reorganization proceedings.
"Micron is pleased with the Tokyo District Court's order to submit Elpida's plan of reorganization to creditors for approval. This is an important step forward in the reorganization process. The combination of Micron and Elpida will create the world's second largest memory company with the strongest product portfolio in the industry," said Mark Durcan, chief executive officer of Micron.