Spansion exploring sale, halts interest payments

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Posted by Brooke Crothers


Spansion said Thursday that it is exploring a merger or sale, as the flash memory chip company delays interest payments on notes.
The Sunnyvale, Calif.-based company announced that it has been "exploring strategic alternatives, including, but not limited to, opportunities to merge with or sell to similar U.S. or foreign businesses."
Spansion, one of the largest flash memory suppliers, was formed by the integration of Advanced Micro Devices' and Fujitsu's flash memory operations in 2003. The company has posted a long string of losses as it has struggled to turn a profit in the fickle NOR flash memory business.
NOR flash is used in set-top boxes and cell phones but addresses a much different market than its better-known cousin, NAND flash. NOR is typically used to store and run computer code, while NAND is used for large-capacity storage, just like hard disk drives.
Spansion received a lukewarm response to its IPO in 2005.
The company said Thursday that it has engaged Barclays Capital "to assist the company in exploring these strategic alternatives," the company said.
In connection with this, Spansion has initiated discussions to begin an "organized process of potential balance sheet restructuring opportunities" and will delay making the interest payment on its outstanding 11.25 percent senior notes due 2016, which is due January 15, the company said.
Standard & Poor's Ratings Services on Thursday lowered its corporate credit rating on Spansion to "D" from "CCC" and the issue-level rating on the company's 11.25 percent senior unsecured notes due 2016 to "D" from "CC."
After a string of quarterly losses, Spansion, according to reports, is also considering Chapter 11 protection.