Spansion creditors ask court to condition plan confirmation on change to replacement rights offer

By Caroline Salls

Pittsburgh, March 8 - Spansion Inc.'s official committee of unsecured creditors said the U.S. Bankruptcy Court for the District of Delaware should confirm the company's plan of reorganization only if Spansion exercises its right to abandon a Silver Lake Sumeru, LP rights offering and move forward with a rights offering proposed by an informal committee of convertible noteholders, according to a post-confirmation hearing letter filed Monday.

The committee said the "convert committee rights offering" provides significantly improved recoveries for unsecured creditors.

Specifically, the committee said evidence presented at the plan confirmation hearing made clear that the noteholders' rights offering "is a viable and more attractive alternative" that will provide general unsecured creditors with more than $54 million of incremental value.

According to the letter, the court has the power to condition plan confirmation on the company's replacement of the rights offering.

The committee said Spansion Silver Lake rights offering negotiation consultant Nathanial Sarkisian admitted at the hearing that the noteholders' rights offering would provide a greater benefit to the unsecured creditors than the Silver Lake offering, even if the creditors did not subscribe to the convertible noteholders' rights offering.

"In rejecting the convert committee's rights offering, then, the debtors are leaving substantial amounts of money on the table, to the detriment of unsecured creditors generally," the committee said in the letter.

The committee said Spansion appears to be proceeding with the Silver Lake rights offering "based upon the preferences of participants who have a different view of plan value than the debtors themselves have espoused in the disclosure statement and upon which the plan rests."

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.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.