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Bondholders: US firm's 'rescue' offer for Elpida is CHEAP

Micron's not paying enough ... see you in court

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A group of Elpida Memory bondholders is trying to block the sale of the bankrupt DRAMurai to Micron because they claim the US firm isn't paying enough.

The bondholders, who identify themselves as "multi-billion dollar Japanese and international investment funds", have filed with the Tokyo District Court to try to stop the sale of Elpida to Micron for 200bn yen ($2.5bn, £1.6bn).

"The announced transaction will allow Micron to seize valuable estate assets without paying a fair price for them, to the obvious detriment of all creditors, a great number of whom are domestic," they said in their filing, translated and also filed with a US bankruptcy court.

The bondholders said that the 200bn yen offered was only just over twice Elpida's projected earnings before tax and deductions, which was a "ridiculously low M&A multiple".

The money is to be paid by Micron as 60bn yen ($756m, £486m) upfront and the further 140bn yen ($1.76bn, £1.13bn) in installments, but the bondholders assert that there are so many conditions on the installments, creditors can't be confident they'll ever be made.

The bondholders want to restructure Elpida's debts and inject some more money into the memory-maker so that it can keep going. They say that this would be better for Elpida's creditors and better for its employees – well, apart from senior management.

The filing also urges the court to look into senior management's responsibility for the Micron deal, particularly that of the CEO of the firm at the time it went bust, Yukio Sakamoto.

"The Bondholders have advised the legal trustee on several occasions of their concerns with respect to the potential conflicts of interest of Mr Sakamoto," the filing said. "It would appear… that Micron intends to employ Mr Sakamoto in a high-level capacity after it becomes the owner of Elpida.

"All of Elpida's stakeholders are entitled to know exactly what happens to Mr Sakamoto if the sale to Micron is implemented."

Any deal to work Elpida out of bankruptcy has to be approved by the court, including the Micron sale and the bondholders' alternative. ®

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