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Elpida UPDATE1
(Japan Economic Newswire Via Acquire Media NewsEdge) TOKYO, Feb. 23 -- (Kyodo) _ (EDS: UPDATING WITH NEW INFO, ADDING INFO IN 1ST-6TH GRAFS)
Struggling semiconductor maker Elpida Memory Inc. is considering asking the government to extend the March 31 deadline of its rehabilitation program by three months, sources close to the matter said Thursday.
Elpida, Japan's sole manufacturer of dynamic random access memory chips, apparently has judged it difficult to compile rehabilitation plans by the deadline, which is stipulated by the program aimed at helping cash-strapped private companies through such measures as preferential tax and accounting treatment.
Also on Thursday, the company said it will reduce its capital by 150 billion yen to 86.1 billion yen in preparation for dividend payments and its buyback of preferred shares from the government-controlled Development Bank of Japan.
Elpida has been facing deterioration in its business performance due to the strong yen and declines in prices of DRAM chips, which are used in such products as personal computers and smartphones.
The company aims to work out its rehabilitation plans by the end of June including a possible capital and business alliance with U.S. chipmaker Micron Technology Inc., the sources said.
To obtain the government's approval for the extension, the company needs to fulfill such conditions as showing the prospect of improving its earnings, but its business environment remains difficult.
The capital reduction will take effect upon approval at an extraordinary general meeting of the company's shareholders on March 28, the semiconductor maker said.
In the capital reduction procedure, 150 billion yen in capital will be transferred to a surplus account to finance dividend payments and equity buybacks.
Elpida issued the preferred shares to the DBJ in August 2009 in line with a business turnaround plan.
The DBJ will be allowed to ask Elpida to buy back the shares in and after April. The shares are now estimated to be worth 31 billion yen, Elpida said.
Elpida added it will ask shareholders to approve a plan to raise the limit on authorized common stock from 400 million shares to 800 million shares to prepare for future capital increases.
As Elpida's earnings have deteriorated amid declining semiconductor prices and the yen's appreciation, the company has been considering capital and business alliances with other semiconductor makers such as Micron Technology.
Meanwhile, the Goldman Sachs and Credit Suisse groups have become major shareholders of Elpida by acquiring stakes of more than 5 percent, they said in reports to the Kanto Local Finance Bureau of the Finance Ministry.
Goldman Sachs group companies hold 6.07 percent of Elpida's outstanding shares, while Credit Suisse group companies have 5.11 percent.
An investor who has acquired a stake of more than 5 percent in a publicly traded company is required to report the acquisition to a local finance bureau.
(c) 2012 Kyodo News International, Inc.
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