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Elpida to Get 280 Billion Yen in Support From Micron, Asahi Says

Elpida Memory Inc., the bankrupt Japanese chipmaker being bought by Micron (MU) Technology Inc., will get 280 billion yen ($3.5 billion) in support from the U.S. company, the Asahi newspaper said.

Micron will buy Elpida shares for 60 billion yen to make it wholly owned in the first half of 2013, according to a revival plan to be submitted in Tokyo District Court today, the Asahi reported without saying where it got the information. Micron, a Boise, Idaho-based maker of computer memory, will provide 80 billion yen in loans and debt guarantees and help Elpida generate 140 billion yen in profit by buying its chips during a seven-year period, the report said.

The revival plan is critical for Elpida President Yukio Sakamoto, one of the court-appointed trustees, to convince bondholders Micron can turn around his company. Combining with Elpida would double Micron’s share of the global market for dynamic random access memory -- the most widely used memory chips in personal computers -- and help it compete with market leader Samsung Electronics Co. (005930)

Micron agreed last month to buy Elpida for 200 billion yen, though creditors told the court they believe Elpida is worth 300 billion yen. Micron will pay 60 billion yen in cash at the closing of the deal, and 140 billion yen in future annual installments through 2019 will come from cash flow generated by Micron’s payments for chips made by Elpida, according to a July 2 statement by the two companies. The companies said they plan to complete the transaction in the first half of 2013.

Bondholders’ Proposal

“Micron believes its proposal offers the best and most certain alternative for various stakeholders of Elpida, including the creditors, the employees, Elpida customers and the Japanese semiconductor industry,” Dan Francisco, a Micron spokesman, said in a e-mailed statement. He declined to comment further.

Elpida declined to comment on the Asahi report.

Elpida bondholders, representing 20 institutional investors, submitted their version of a revival plan that includes offering 30 billion yen in credit, the group said Aug. 14. The group is seeking investors other than Micron, it said.

The group will ask the court to present its revival plan in a creditor vote that may be held in October, according to the statement.

Elpida, an Apple Inc. supplier, sought protection from creditors in February with 448 billion yen of liabilities after lower prices for DRAM chips and a stronger yen, which erodes the value of repatriated earnings from overseas, led the company to report a fifth straight quarter of losses.

Micron, the largest U.S. maker of computer memory, won approval from the Tokyo District Court in May to negotiate to buy Elpida’s entire business after the Japanese company held two rounds of bidding. The agreement announced July 2 is subject to approval by the court.

To contact the reporters on this story: Naoko Fujimura in Tokyo at nfujimura@bloomberg.net; Mariko Yasu in Tokyo at myasu@bloomberg.net

To contact the editor responsible for this story: Michael Tighe at mtighe4@bloomberg.net

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