Elpida bondholders to vote against Micron plan?

TOKYO, JAPAN: A group of Elpida Memory Inc bondholders will vote against Micron Technology Inc's plan to acquire the bankrupt Japanese chipmaker for about $750 million, arguing it undervalues the company's assets, a court filing shows.

In a filing to a Tokyo district court on July 9, the bondholders said they would put forward an alternative proposal to counter Micron's offer. The bond holders identified themselves as multi-billion dollar funds, without disclosing their names.

It was not immediately clear if the bondholders had enough votes to scuttle the transaction, which was agreed earlier this month.

Under the deal, Micron will pay 60 billion yen ($753.7 million) for Elpida's equity and pay creditors 140 billion yen in annual installments until 2019. Micron also agreed to buy a 24 per cent stake in Taiwan-based Rexchip Electronics from Powerchip Technology Corp for $334 million.

The bondholders said the installments appeared to "be so conditional that creditors cannot be confident that they will ever be made", according to the filing.

They also argued that Micron's offer to pay $334 million for the 24 per cent stake in Rexchip implied that Elpida's 65 per cent stake in Rexchip alone was worth 72.3 billion yen, a premium to the 60 billion yen offered for all of Elpida's equity.

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 it filed for bankruptcy in February with 448 billion yen in debts, unable to keep pace with global competition and tumbling DRAM prices.

The bondholders said they were multi-billion dollar international investment funds that invest on behalf of clients including Japanese and international pension funds and educational and charitable organizations.