Spansion verbally agrees to buy former unit's distribution business

By Caroline Salls

Pittsburgh, Jan. 8 - Spansion Inc. has reached verbal agreement to acquire the distribution business of its former subsidiary, Spansion Japan, which is the subject of a proceeding under the Japanese Corporate Reorganization Law in the Tokyo District Court, according to a company news release.

Spansion said it has also verbally approved a new foundry services agreement, which would include wafer and sort services from Spansion Japan.

"Upon court approval, these agreements finalize Spansion's plan for manufacturing services and ongoing support for Japanese customers as it continues its planned emergence from Chapter 11 in the first quarter of 2010," Spansion president and chief executive officer John Kispert said in the release.

"We are pleased that this agreement will also help enable Spansion Japan to reorganize as a standalone entity."

A representative of GE Financial Services Corp., the agent for Spansion Japan's syndicate of secured lenders, has announced the lenders' support for the agreements, subject to final approval of the syndicate members, the company said.

The agreements are also subject to completion of definitive agreements and approval by the U.S. Bankruptcy Court for the District of Delaware and the Tokyo District Court.

According to the release, Spansion Japan would retain some unsecured claims against Spansion Inc. that could be compromised under the latter's proposed plan of reorganization.

Spansion said any awards related to these claims would be treated as pre-bankruptcy obligations and would not affect its capital structure upon emergence from Chapter 11 bankruptcy.

The definitive terms and conditions of the settlement will be filed with the bankruptcy court by Jan. 15, and a hearing has been scheduled for Jan. 29.

Spansion, a Sunnyvale, Calif.-based maker of flash memory products, filed for bankruptcy on March 1, 2009. Its Chapter 11 case number is 09-10690.

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