Spansion Japan Dispute Over Rejection Damages Claims Settled | Cypress Semiconductor
Spansion Japan Dispute Over Rejection Damages Claims Settled
SUNNYVALE, Calif., Oct 20, 2010 --
Spansion Inc. (NYSE: CODE) announced today that the claims agent appointed to resolve certain pre-bankruptcy claims has entered into an agreement with Spansion Japan, a former subsidiary of Spansion Inc., to settle all claims asserted by and between Spansion Japan and the chapter 11 estates of Spansion Inc. and its related debtors.
Spansion Japan had asserted a claim for approximately $936 million related to damages allegedly incurred as a result of Spansion's rejection of its foundry agreement with Spansion Japan. The claims agent has been engaged in litigation with Spansion Japan over the amount of damages sustained by Spansion Japan.
As part of the agreement, Citi, which is not a party to this litigation, will purchase the rejection damages claim from Spansion Japan for $100 million in cash. In separate transactions, the claims agent will agree to allow the rejection damages claim held by Citi in the amount of $200 million, and Spansion LLC, a subsidiary of Spansion Inc., will purchase 85 percent of the allowed claim from Citi for $85 million in cash. These transactions will become effective upon final approval of the settlement agreement by the U.S. bankruptcy court and the Tokyo District Court, which is handling Spansion Japan's corporate reorganization proceeding in Japan. The benefit to Spansion will depend upon the total size of the claim pool ultimately determined in the company's chapter 11 cases and the company's stock price. However, the company believes the transaction will likely be accretive to its EPS.
"We believe this transaction will benefit all of Spansion's stockholders," said John Kispert, president and CEO of Spansion Inc. "The settlement provides an opportunity to retire some shares at an attractive price and eliminate a potentially large selling stockholder."
This release contains forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Investors are cautioned that these forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from those statements. The risks and uncertainties include whether the bankruptcy court will approve the proposed settlement of Spansion Japan's claim and whether the proposed related transaction will be consummated and accretive to the company; the company's ability to: manage costs; achieve adequate liquidity; execute on its new strategic focus; reach a sustainable business model; survive as a stand-alone entity; reach operational efficiency; and reach and sustain profitability. Additional risks related to the company's recent emergence from bankruptcy include: the company's ability to transfer wafer production capacity to another location or to a third-party foundry, or to find alternative methods of distributing and selling its products in the event that Spansion Japan is not successful or has difficulties as a reorganized company; any negative impacts on the company's business, results of operations, financial position or cash management arrangements; the negative impact on relationships with employees, customers, suppliers and contract manufacturers and other stakeholders; and the failure of the company to successfully implement the plan of reorganization. In addition, the instability of the global economy and tight credit markets could continue to adversely impact the company's business in several respects, including adversely impacting credit quality and insolvency risk of the company and its customers and business partners, including suppliers and distributors; bookings; and reductions and deferrals of demand for Spansion products. The company urges investors to review in detail the risks and uncertainties discussed in the company's Securities and Exchange Commission filings, including but not limited to the company's most recent Annual Report on Form 10-K for fiscal 2009 and Quarterly Reports on Form 10-Q. Unless otherwise required by applicable laws, the company undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
Spansion's (NYSE: CODE) technology is at the heart of electronics systems, powering everything from the internet of today to the smart grid of tomorrow, positively impacting people's daily lives at work and play. Spansion's broad Flash memory product portfolio, smart innovation and industry leading service and support are enabling customers to achieve greater efficiency and success in their target markets. For more information, visit http://www.spansion.com.
Spansion(R), the Spansion logo, MirrorBit(R), and combinations thereof, are trademarks and registered trademarks of Spansion LLC in the United States and other countries. Other names used are for informational purposes only and may be trademarks of their respective owners.