Spansion looks to extend Barclays financing termination date to May 10

By Caroline Salls

Pittsburgh, March 30 - Spansion Inc. requested court approval to extend the termination date on its senior secured debt facility with Barclays Bank plc to May 10 from April 10 in light of delays in confirmation of the company's plan of reorganization, according to a Monday filing with the U.S. Bankruptcy Court for the District of Delaware.

The company said the court indicated at a March 23 hearing that it would not issue a written decision on issues raised at the plan confirmation hearing until at least March 26.

Assuming the court decides to confirm the plan, Spansion said it and other parties in interest might need to draft and submit an order that conforms to the court's decision.

While multiple forms of the confirmation order have been circulated to interested parties and filed with the court, the company said the preparation of a consensual form of order may require at least a few days.

In addition, Spansion said bankruptcy rules do not allow any plan confirmation order to take effect for 14 days after entry of the order.

Although it plans to ask the court to waive this 14-day period, the company said it is not clear whether the court would be willing to do so.

"Even in the best case, with a decision on March 29, 2010 and a confirmation order entered the same day, the 14-day period still runs through April 12, 2010," Spansion said in the motion.

The company said it is still seeking the consent of its super majority lenders to the proposed 30-day extension.

The amendment is subject to payment of a $450,000 fee to the lenders, the company depositing cash into an escrow account to pay the maximum amount of interest that would accrue on the loans through the extended termination date and the extension of the availability to the borrower of the proceeds from the rights offering.

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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