Memory chip maker Spansion files for bankruptcy
NEW YORK (Reuters) - Spansion Inc SPSN.O, a U.S. maker of flash memory chips, sought bankruptcy protection on Sunday, becoming the latest chip maker to succumb to falling prices in the memory chip market and a deepening recession.
Spansion, which recently said it was exploring a sale of the company, said it plans to use the bankruptcy process to restructure debt obligations and refocus on its more profitable divisions.
The company and four U.S. affiliates filed for bankruptcy protection in U.S. bankruptcy court in Delaware on Sunday, listing assets of $3.84 billion, and debts of almost $2.4 billion.
Spansion said it plans to refocus on its embedded flash memory products, intellectual property (IP) solutions, and the profitable parts of the wireless segment.
Prior to the bankruptcy filing, Spansion said it has consulted with an ad hoc consortium of holders of its $625 million senior secured floating rate notes due in 2013, and was in talks on a reorganization plan with the consortium that would enable it to emerge more quickly from court protection.
The company is also exploring proposals from multiple parties seeking a "strategic transaction," it said in a statement.
Struggling semiconductor makers around the world have been looking to merge or form alliances to survive a sharp downturn in demand and chip prices that has pushed much of the industry into the red and forced some to seek government help.
Flash memory chips are most commonly used in portable music players and digital cameras, whose sales are slipping as recession-hit consumers cut back on spending.
Spansion, based in Sunnyvale, California, said it can fund expenses and business operations with its current and expected cash resources, but is also in discussions with its debtholders about obtaining debtor-in-possession (DIP) bankruptcy financing.
Its shares have lost more than 98 percent of their value over the last year as the tech sector's problems deepened, closing on Friday at just five U.S. cents.
The company said that none of its subsidiaries outside of the United States and Japan have entered court protection.
Its Japanese arm filed for bankruptcy protection on February 9 with total liabilities of $810 million, following in the heels of Germany's Qimonda (QMNDQ.PK) in becoming the latest victim of the global chip sector's downturn.
The case is In re: Spansion Inc, U.S. Bankruptcy Court, District of Delaware, No. 09-10690.
(Reporting by Emily Chasan; Editing by Kim Coghill)
