UPDATE 1-Spansion noteholder group raises $419 mln in rival bid

* Group of convertible noteholders to fund rival reorg plan

* Funding exchange for equity in reorganized co

* Convertible noteholders to pay off co’s senior
noteholders

April 15 (BestGrowthStock) – The ad hoc committee of convertible
noteholders of Spansion Inc (SPSNQ.PK: ) has raised more than
$419 million to fund a rival reorganization plan for the
bankrupt flash memory chips maker, court filings showed.

Under the proposed deal, members of the convertible
noteholders committee will pay senior noteholders in full,
effectively stepping into their shoes, in exchange for common
stock in the reorganized company.

Unsecured creditors of Spansion, the noteholders committee
and the company’s equity committee have now sought to end the
Spansion’s exclusive right to file a reorganization plan and
want the rival plan to be considered for confirmation on a
parallel track.

Earlier this month, U.S. Bankruptcy Judge Kevin Carey in
Wilmington, Delaware, refused to confirm Spansion
reorganization plan, after creditors complained that incentives
that the company proposed to award employees were too generous.

Creditors objecting to Spansion’s reorganization plan had
contended that the company had not proposed the incentive
payouts in good faith.

Spansion was the world’s third-largest maker of flash
memory chips when it filed for bankruptcy protection in March
2009, after sales fell and credit tightened.

Flash memory is used in such products as digital cameras
and DVD players, and lets devices retain data even when power
is turned off.

The case is In re: Spansion Inc, U.S. Bankruptcy Court,
District of Delaware, No. 09-10690.

Investment Basics

(Reporting by Santosh Nadgir in Bangalore; Editing by Ratul
Ray Chaudhuri)

UPDATE 1-Spansion noteholder group raises $419 mln in rival bid