Elpida Memory clears hurdle on way to Micron deal

Thu Jan 17, 2013 9:51am EST
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By Tom Hals

(Reuters) - Elpida Memory Inc won court approval for technology deals over the objections of U.S. bondholders, who argued the agreements were an attempt to bind the bankrupt chipmaker to a proposed $2.5 billion sale to Micron Technology Inc.

A U.S. Bankruptcy Court judge in Delaware found no evidence of collusion or improper motives Thursday in Elpida's technology licensing deals with Micron and a $15 million patent sale to Rambus Inc.

U.S. bondholders opposed the deals because they said they would effectively tie Elpida to its proposed sale and were unfairly beneficial to Micron.

"The bondholders do not cite any facts to contest the proof that these agreements confer substantial benefits on Elpida's estate," Judge Christopher Sontchi said in his 43-page opinion.

Elpida said it would be able to immediately begin improving its operations thanks to the licensing agreements with Micron. Elpida's lawyers have described the objections to the technology agreements as attacks on the Micron deal itself.

The bondholders, led by hedge funds Linden Advisors, Owl Creek Asset Management and Taconic Capital Advisors, have argued Elpida is worth nearly $4 billion. They have attacked the Micron sale as a sweetheart deal negotiated in secret in Japan, where Elpida's main bankruptcy is taking place.

Elpida filed for bankruptcy protection from creditors with a Tokyo court in February and asked the Delaware Bankruptcy Court to protect its U.S. assets soon after.

The bondholders presented their own plan for reorganizing Elpida to the Tokyo court. However, the court accepted Elpida's plan for the sale and the bondholders have shifted their fight against the deal to the U.S. Bankruptcy Court in Delaware.   Continued...

Elpida chips are seen at an electronic store in Tokyo's Akihabara district April 24, 2012. REUTERS/Toru Hanai