Spansion to sell Suzhou facility for $31M
Following the deal's closing, PTI will provide final manufacturing services to Spansion at the Suzhou facility pursuant to a supply agreement between Spansion LLC and PTI.
By Suzanne Deffree, Managing Editor, News -- EDN, August 26, 2009
As part of its ongoing restructuring efforts, Spansion Inc will sell one of its final manufacturing facilities, raising $31 million cash for the hard-hit memory maker.
Spansion's wholly owned subsidiary Spansion LLC has signed a definitive agreement with Powertech Technology Inc (PTI) to sell to PTI its final manufacturing facility located in Suzhou, China, and certain related equipment.
Under the terms of the agreement and subject to US bankruptcy court approval, PTI will pay Spansion LLC the approximate $31 million over the six months following the deal's closing and Spansion LLC will transfer 100% of its shares in its subsidiary Spansion Holdings (Singapore) Pte Ltd, which is the holding company of the Suzhou facility.
Also following the closing, PTI will provide final manufacturing services to Spansion at the Suzhou facility pursuant to a supply agreement between Spansion LLC and PTI.
"As an industry-leading final assembly and test service company, we believe PTI is an ideal final manufacturing resource for Spansion," said John Kispert, Spansion president and CEO, in a statement. "Spansion is executing on our strategy to refine our business model and focus on our core competencies. We believe this agreement will help Spansion emerge from the Chapter 11 process a stronger and more focused company."
Spansion stated in late July that it expects to emerge from Chapter 11 by the end of Q4 as a leaner, more competitive company that has greater operational efficiencies and is positioned to lead to positive free cash flow and profitability.
The Sunnyvale, Calif-based flash maker has been undergoing a restructuring effort for some time now. In 2008, the company had a sharp eye on manufacturing costs and announced plans to transfer certain manufacturing, test, and assembly assets to third parties and establish manufacturing and technology partnerships as it refocused its own capital investments. In 2009, after cutting 3000 jobs to save $225 million and naming Kispert its new CEO in February, Spansion filed for bankruptcy and appointed a chief restructuring officer in March. Following that, the company in April announced it was pursuing strategic alternatives for its wireless business, so that it could focus on the on the embedded solutions market and intellectual property licensing.
The Spansion Suzhou facility is one of four factories in Spansion's final manufacturing network, with approximately 565 employees. Operating in China since 1998, the Suzhou facility is certified to ISO 9001:2000 and ISO/TS 16949:2002, as well as ISO 14001 and OHSAS 18001 standards. Operations at Spansion Suzhou include: multi-chip-package (MCP) development; high-volume manufacturing of MCP, FBGA, and TSOP packages; assembly, test, mark and pack; and customer support.
The transaction and its final terms are subject to US bankruptcy court approval.
