UPDATE 2-Infineon says to fight Qimonda legal action

Thu Dec 2, 2010 9:38am EST

Related Topics

* Qimonda insolvency lawyer seeks unspecified amount

* Infineon will defend itself "vigorously"

* Infineon will take no provisions

* Shares up 0.7 percent

(Recasts, adds Infineon comments)

By Christoph Steitz and Nicola Leske

FRANKFURT/PARIS, Dec 2 (Reuters) - German chipmaker Infineon (IFXGn.DE) said it would defend itself vigorously against legal action by the insolvency administrator of Qimonda, its former memory chip unit, seeking an unspecified payment.

"We are firmly convinced that we have done nothing wrong," an Infineon spokesman said on Thursday, adding that the company would defend itself against this action and pursue all avenues of legal proceedings.

The spokesman also said Infineon would not take any provisions except for legal costs, which would have a negligible impact on Infineon's balance sheet.

Qimonda collapsed in 2009 as chip prices plunged and then filed for insolvency after failing to hammer out details of a rescue package in time.

"The (legal) action asserts that, in connection with the carve-out of the memory business to Qimonda AG, Infineon utilised a previously formed shell company and 'economically re-established' this company through the transfer of the memory business," Infineon said in a statement earlier on Thursday.

"When a shell company is created the register checks whether it has sufficient capital, once that shell company actually starts operations the register reviews the capital base," Infineon's legal expert Cornelius Simons said on a conference call, referring to rules on company registrations.

Infineon registered the shell company in 2004 and in 2006 turned it into an operational business -- Qimonda -- with its memory chip operations.

"The formalities took longer than planned but if the intended purpose of the shell company is clear from the beginning, then a review is usually not necessary," Simons said, adding that all parties involved at the time had agreed that a re-examination was not required.

However, the insolvency administrator's legal action claims that Infineon was required to provide the company register with a declaration and is obliged to refund to Qimonda the difference between Qimonda's assets at the time of insolvency and its equity capital, Infineon said.

Simons said that proceedings could take four years or longer and added that in theory the action could result in a large payment for Infineon but that it was highly unlikely it would come to that.

A spokesman for insolvency administrator Michael Jaffe said he had to pursue all options to meet the demands of Qimonda's creditors.

(Editing by Jane Merriman)

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