* Plan submitted to Tokyo District Court
* Elpida Memory has agreed to be bought by Micron Technology
* Bondholders' group submitted plan last week
By Junko Fujita
TOKYO, Aug 21 Failed Japanese chipmaker Elpida
Memory Inc, which has agreed to be bought by U.S. rival Micron
Technology Inc, said on Tuesday it had submitted a
restructuring plan to the Tokyo District Court, the next step in
efforts to ensure the survival of some of its operations.
Micron agreed in early July to buy Elpida for about $750
million in cash and pay creditors a total of $1.75 billion in
annual instalments through 2019. A group of Elpida bondholders
said Micron is offering too little for the chipmaker.
Elpida did not elaborate the content of the plan.
The group, which says it holds about $1.2 billion in Elpida
bonds, submitted a plan to the Tokyo court last week that values
the chipmaker at more than 300 billion yen ($3.78 billion), well
above Micron's offer.
The bondholders did not put forward an equity investor,
although it offered to lend Elpida 30 billion yen to help the
The court may endorse one of the plans, or even both, after
which all of Elpida's creditors will get to vote.
A rejection of Micron's offer by the creditors could lead to
the liquidation of Japan's last remaining player in the dynamic
random access memory (DRAM) chip market.
But lawyers outside the deal say this is only a slim
possibility because the court would most likely allow creditors
to look for another equity investor.
The group of bondholders so far has not been able to find an
equity investor, which may persuade other creditors to support
Micron's cash offer.
"It would be difficult for creditors to vote against the
plan submitted by Elpida's court-led administrator unless there
would be a new sponsor already being secured," said Makoto
Tahira, a Tokyo-based lawyer specializing in corporate
"Without a sponsor, Elpida could be liquidated and creditors
should not want this to happen," he said.
The group of bondholders, consisting of about 20
institutions including hedge funds, said it was in talks with
more than one company to make a cash injection into the
Elpida filed for bankruptcy in February with about 448
billion yen ($5.6 billion) in liabilities.
The company was hurt by low prices for DRAM chips and a
growing preference for tablets that dampened demand for memory
chips used in personal computers. It also faced growing costs to
implement new technologies, which have helped drive
consolidation in the highly competitive and cyclical sector.
Micron's purchase of Elpida, an Apple supplier that
makes chips for smartphones, tablets and computers, would push
the U.S. company into second place behind market leader Samsung
Electronics in the global market for DRAM chips.
Micron, which also makes NAND flash memory chips, has also
committed as much as 64 billion yen to fund Elpida's capital
investments, as well as a guarantee of 16 billion yen in loans
for Elpida, according to a document distributed to investors in
July and seen by Reuters.
Elpida needs a partner that could help it diversify its
revenue streams, said Akira Minamikawa, a Tokyo-based principal
analyst at U.S. research firm IHS iSuppli.
"Elpida in the end could not survive just with DRAM
technology. Without a strong NAND business, I don't think it
holds that much value."