Spansion: court confirms amended plan of reorganization, approves exclusivity extension

By Lisa Kerner

Charlotte, N.C., April 16 - Spansion Inc.'s second amended joint plan of reorganization was confirmed on Friday, according to a filing with the U.S. Bankruptcy Court for the District of Delaware.

The court extended Spansion's exclusive period to solicit votes on its plan to April 23.

"We believe the confirmed plan positions Spansion for future success and we are proud to have made it through this process with a strong balance sheet, great technology and a motivated workforce," said Spansion chief executive officer John Kispert in a company news release.

As previously reported, Spansion filed an amended plan on April 7 after judge Kevin J. Carey said the company's plan could not be confirmed.

According to the judge, Spansion had not demonstrated that its proposed equity incentive plan was proposed in good faith and was fair to creditors, and a specified third-party release violated bankruptcy law.

Under the amended plan, reorganized Spansion will reserve 6.58 million shares of new common stock for issuance under an equity incentive plan for employees, management and directors, down from 9.01 million shares under the previous plan.

The 6.58 million shares will be issued provided that, for 90 days after the plan effective date, grants of no more than 3.29 million shares of new common stock can be issued for exercise, conversion or purchase price below the greater of the value per share of the new common stock issued under the plan or the fair market value of the stock at the time of issuance.

The new equity incentive plan will have a term of 10 years.

Creditor releases

Also under the amended plan, the release by holders of claims and interests provision was made more specific to include each entity that is a member of a class of creditors scheduled to receive a distribution under the plan if that entity did not exercise its right to opt out of the releases.

In addition, Carey said the company must set aside a reserve in the estimated amount of Tessera Inc.'s administrative claim.

The company said in the amended plan that it would hold the estimated amount in reserve until Tessera's claim is allowed or disallowed.

Creditor treatment

Under the plan, creditor treatment will include:

• Holders of secured creditor claims will enter into documentation with the company reflecting their post-effective date relationship;

• The UBS credit facility will remain in place, and the claims will be unaltered;

• Holders of floating-rate note claims will be paid under the cash-out option, including $158.3 million in cash, $237.5 million of new senior secured notes and $237.5 million of new convertible notes;

• Holders of other secured claims will either have their claims reinstated or will receive cash or the collateral securing the claim;

• Holders of senior notes claims, general unsecured claims and exchangeable debenture claims will receive a share of 46.25 million shares of new Spansion common stock under the amended plan;

• Holders of convenience claims of $2,000 or less will recover 100% in cash;

• Holders of non-compensatory damages claims, old Spansion interests, securities claims and other old equity rights will receive no distribution; and

• Other old equity will be reinstated.

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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