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CORRECTED-UPDATE 2-Elpida bondholders offer $383 mln loan in rival plan
August 14, 2012 / 1:10 AM / 5 years ago

CORRECTED-UPDATE 2-Elpida bondholders offer $383 mln loan in rival plan

(Corrects spelling of Alvarez & Marsal in 9th paragraph)

By Junko Fujita

TOKYO, Aug 14 (Reuters) - A group of bondholders in Elpida Memory has put forward an alternative restructuring plan for the failed chipmaker, putting pressure on Micron Technology Inc to increase its takeover offer for Elpida.

The bondholders, who believe U.S.-based Micron is acquiring Elpida too cheaply, offered to lend 30 billion yen ($383 million) to the bankrupt firm to help it restructure in a plan presented to the Tokyo District Court, and put Elpida’s value at more than 300 billion yen.

Micron agreed last month to acquire Elpida’s equity for 60 billion yen and pay creditors a total of 140 billion yen in annual instalments until 2019.

Analysts said the restructuring plan by the bondholders was primarily aimed at putting pressure on Micron to raise its bid.

“The ultimate purpose of the bondholders group is to maximize their return from the bond investments. They are not seeking to control the company,” said a credit market analyst who declined to be named as he was not authorised to comment on Elpida.

“But there is a slight chance that the bondholders’ group could win as it seems that other lenders are not happy with the process of Micron winning the exclusive right to buy Elpida,” he added.

Elpida, Japan’s last remaining player in the dynamic random access memory (DRAM) market, filed for bankruptcy protection in February, hit by the strong yen and falling prices of chips while global demand for personal computers weakened.

The bondholders, who comprise 20 institutions including hedge funds Linden Advisors, Lim Advisors and Owl Creek Asset Management, are also in talks with more than one entity to make a cash injection into Elpida, a spokesman for the group said.

The group, which says it holds about $1.2 billion of bonds issued by Elpida, has hired Alvarez & Marsal, a global firm specializing in business turnarounds, and Japanese boutique firm Crosspoint Advisors as financial advisers.

“The bondholders group is not seeking to buy out Elpida,” the group said in a statement. “We are hoping that Elpida’s value is assessed for Elpida’s employees as well as debt holders which include Japanese retail investors as well as institutional investors, and also for other stakeholders.”

The alternative plan was flagged last month when a group of Elpida bondholders opposed the Micron plan.

The rival proposal, which is unusual in bankruptcy cases in Japan, requires court approval before it can be put to a vote by all of Elpida’s creditors.

It was not clear if the group of bondholders had enough votes to scuttle the Micron deal agreed earlier this month.

Micron is expected to submit its own restructuring plans to the court on Aug. 21.

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 prices.

$1 = 78.3200 Japanese yen Reporting by Junko Fujita; Additional reporting by Mari Saito; Editing by Richard Pullin

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