Spansion Preps for $890M IPO

Online staff -- Electronic News, 11/4/2005

Spansion Inc. filed the necessary documentation with the U.S. Securities and Exchange Commission (SEC) in preparation for its initial public offering (IPO) that includes 35 million shares of Class A common stock for a proposed maximum aggregate offering price of $690 million, according to the filing.

The company expects the IPO price per share to be between $16 and $18, trading on the Nasdaq market under the symbol “SPSN.”

Spansion’s common stock will consist of four classes of stock: Class A common stock, Class B common stock, Class C common stock and Class D common stock. Founding company Advanced Micro Devices (AMD) Inc. will own 42,352,940 shares of the Class A common stock and all of the Class B common stock. As the holder of Class B common stock, AMD will have the right initially to elect two directors. Fujitsu Ltd. will own all Class C and Class D common stock that gives it the right initially to elect one director.

Upon completion of the offering, and assuming no exercise of the underwriters’ over-allotment option, the Class A and Class B common stock owned by AMD will represent approximately 40 percent of the total outstanding shares of common stock, and the Class C and Class D common stock owned by Fujitsu will represent approximately 26.7 percent of the total outstanding shares, Spansion said in its filing.

Concurrently, Spansion is making a public offering of 8 million shares of mandatory convertible preferred stock. The IPO price of mandatory convertible preferred stock in that offering is $25 per share, and will not be listed or traded. Such shares will be convertible into an aggregate of up to 11,764,706 shares of Class A common stock, assuming certain conditions. Net proceeds from this offering of mandatory convertible preferred stock will be used for working capital, capital expenditures and general corporate purposes, the filing continued.

Also, indirect wholly-owned subsidiary Spansion LLC intends to issue up to $400 million aggregate principal amount of senior unsecured notes in a private placement and apply the net proceeds from the sale of the notes to repay a portion of outstanding borrowings, including all amounts owed under promissory notes to AMD and Fujitsu.

Spansion was originally created as a Flash memory manufacturing venture of AMD and Fujitsu in 1993 with a primary function to manufacture and sell Flash memory wafers to AMD and Fujitsu, who in turn converted the Flash memory wafers into finished Flash memory products and sold them to their customers.

By 2003, AMD and Fujitsu desired to expand the operations of Spansion to achieve economies of scale, add additional Flash memory wafer fabrication capacity, include assembly, test, mark and pack operations, include R&D capabilities along with various marketing and administrative functions, the company said.

As a result, Spansion was reorganized as a Flash memory company by integrating the manufacturing venture with other Flash memory assets of AMD and Fujitsu. Since this reorganization, Spansion said it has manufactured and sold finished Flash memory devices to customers worldwide through sole distributors, AMD and Fujitsu, Spansion concluded.