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TPG Capital Said to Plan Bid for Japanese Chipmaker Elpida

TPG Capital Said to Plan Bid for Japanese Chipmaker Elpida
Elpida Memory Inc. memory chips. Photographer: Tomohiro Ohsumi/Bloomberg

TPG Capital plans to bid for Elpida Memory Inc., the Japanese memory-chip maker that filed for bankruptcy protection, a person familiar with the matter said.

The person, who asked not to be identified because the information isn’t public, declined to comment on an offer amount. An Elpida spokesman in Tokyo and Tim Payne, an external spokesman for TPG in Hong Kong, didn’t return phone calls seeking comment.

Gaining control of Tokyo-based Elpida, which was bailed out by the Japanese government and banks in 2009, will give the buyer access to 12 percent of the global market for dynamic random access memory, or DRAM chips, used in computers. Hynix Semiconductor Inc., the world’s second-largest maker of such semiconductors, has also submitted an initial proposal for Elpida, which was delisted from the stock market last month.

TPG and China’s Hony Capital Ltd. are preparing to make a joint bid for Elpida, the Nikkei reported today, without citing anyone. Hony Capital Chief Executive John Zhao didn’t immediately respond to queries seeking comment.

Boise, Idaho-based Micron Inc. has been in talks with Elpida since the end of last year and is considered a candidate to buy the Japanese chipmaker, the Nikkei newspaper reported on March 30, without saying where it got the information.

Elpida filed for bankruptcy in February with liabilities of 448 billion yen ($5.4 billion) after losing money for five quarters. Falling chip prices and a stronger yen eroded earnings at the company, whose customers include Apple Inc.

The Japanese company’s 0.5 percent five-year convertible note offered in October 2010 was unchanged at 15.5 yen per 100 face value as of 4:46 p.m. in Tokyo, according to Citigroup Inc. prices.

Defaulting Bonds

DRAM prices plunged to a record low last year after PC shipments missed analyst forecasts. The price of the benchmark DDR3 2-gigabit DRAM declined to a record 71 cents in November, compared with $4.85 on Sept. 1, 2010, amid slowing personal-computer sales, according to DRAMeXchange, Asia’s biggest spot market for the chips. The price has since risen over $1.

Hynix, Elpida, and other makers of DRAM chips lost a combined $14 billion in the past three years, according to Bloomberg calculations.

Revival Plan

The company gained court approval on March 23 for President Yukio Sakamoto to lead its revival plan after filing for Japan’s biggest bankruptcy in two years, which caused a plunge in the company’s shares and bonds. Elpida plans to submit a restructuring plan by Aug. 21.

Elpida had said it defaulted on six bonds as they came due for redemption Feb. 27, according to a company statement. The face value of the bonds totaled 138 billion yen, according to data compiled by Bloomberg.

The chipmaker was created through the 1999 merger of the memory businesses of NEC Corp. and Hitachi Ltd. Toshiba Corp. announced its withdrawal from the DRAM business in 2001 to focus on making NAND flash memory chips.

Suwon, South Korea-based Samsung Electronics Co. controlled 45 percent of the DRAM market by value in the third quarter, according to Englewood, Colorado-based IHS Inc. Hynix held a 22 percent share, followed by Elpida’s 12 percent, the researcher said.

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