* Elpida's bondholders to submit a counter plan - document
* Micron's payment of 60 bln yen for Elpida is too little -
* Elpida's bondholders questions trustee Sakamoto's role
By Junko Fujita
TOKYO, July 10 A group of Elpida Memory Inc
bondholders will vote against Micron Technology Inc's
plan to acquire the bankrupt Japanese chipmaker for about
$750 million, arguing that it undervalues the company's assets,
a court filing shows.
In a filing to a Tokyo district court on July 9, the
bondholders said they would present an alternative proposal to
counter Micron's offer. The bondholders, which did not disclose
their identities, said they were multi-billion dollar
international funds investing on behalf of clients including
Japanese and global pension funds.
The submission of an alternative plan, which is unusual in
bankruptcy cases in Japan, would require the approval of the
court before it could be put to a vote by all of Elpida's
creditors. It was not immediately clear if the group of
bondholders had enough votes to scuttle the Micron deal agreed
earlier this month.
The group is considering striking an alliance with other
Elpida creditors, including major Japanese banks, in drawing up
the plan that would involve bringing in a new sponsor to replace
Micron, said a source with direct knowledge on the matter.
The counter proposal will be completed by October when a
voting for the restructuring takes place, said the source, who
declined to be identified because the information was
Micron agreed to acquire Elpida's equity for 60 billion yen
($753.7 million) and pay creditors a total of 140 billion yen in
annual instalments until 2019. Micron will also buy a 24 percent
stake in Taiwan-based Rexchip Electronics from
Powerchip Technology Corp for $334 million.
The bondholders said the instalments appeared to "be so
conditional that creditors cannot be confident that they will
ever be made," according to the filing.
They also argued that Micron's offer to pay $334 million for
the 24 percent stake in Rexchip implied that Elpida's 65 percent
stake in Rexchip alone was worth 72.3 billion yen, a premium to
the 60 billion yen offered for all of Elpida's equity.
The acquisition of Elpida would push Micron into second
place behind market leader Samsung Electronics in
the global market for DRAM computer memory chips.
The deal would also ensure the survival of some of Elpida's
operations, which had been put in jeopardy after the chipmaker
filed for bankruptcy in February with 448 billion yen in debts,
unable to keep pace with global competition and tumbling DRAM
Micron's acquisition of Elpida for the total sum of 200
billion yen was announced on July 2. On that day, Micron told
analysts that it was purchasing Elpida at a "deeply discounted
multiple'' that would immediately contribute to its earnings,
the group of bondholders said in the filing.
This is a "ridiculously low" acquisition multiple by any
reasonable standard for mergers and acquisitions, the
Based on Micron's own estimate for Elpida, the 200 billion
yen represents only 2.1 times the chipmaker's EBITDA, or
earnings before interest, taxes, depreciation and amortization,
a commonly used method to gauge the value of a company, the
The bondholders also asked the Tokyo district court to pass
judgement on Yukio Sakamoto, a trustee of Elpida who served as
chief executive of the company until the chipmaker filed for
All of Elpida's stakeholders are entitled to know exactly
what happens to Sakamoto if the sale to Micron is implemented,
the group said in the filing.
The bondholders, which also invest on behalf of educational
and charitable organisations, said they wanted to know if
Sakamoto would continue to be employed by Elpida or Micron, and
if so they would like to know the position he would hold and the
compensation he would be getting.
Elpida's failure, Japan's biggest bankruptcy ever by a
manufacturer, chose Micron as its preferred investor in May.
It is rare in Japan for creditors to get involved in the
restructuring of a bankrupt company.
Last year a group of foreign creditors of failed consumer
lender Takefuji filed a motion seeking a better recovery rate on
their debts, but it was rejected by the court.