Silver Lake Invests in Spansion

The investment, following the company's emergence from Chapter 11, comes out of the firm's mid-market fund.

By KEN MacFADYEN

May 12, 2010

Silver Lake Sumeru made a bet in the flash memory space, backing Spansion with an investment following the company's emergence from bankruptcy protection. Terms of the deal were not disclosed.

Spansion is a developer and manufacturer of flash memory used in products such as mobile phones, automotive electronics, PC peripherals and other consumer electronics. The company has struggled in the face of the recession, filing for bankruptcy in March, 2009. Upon its emergence from bankruptcy, Spansion holds roughly $480 million of debt, $230 million of cash on its balance sheet and has a $65 million line of credit, secured against its assets, that remains undrawn.

As part of the investment, Silver Lake Sumeru managing directors Ajay Shah and Paul Mercadante will assume two spots on the company's board of directors.

As part of Spansion's restructuring, Silver Lake Sumeru entered into a backstop rights purchase agreement with the company, in which the firm would acquire the balance of shares not subscribed for by holders of claims. As part of the reorganization, Spansion had offered 12,974,496 shares of new common stock at a price of $8.43 a share.

In the press release announcing the deal, Silver Lake identified that Spansion, post bankruptcy, is seeking to evolve from being a broad based flash memory business to a supplier focused more closely on serving the embedded and targeted wireless markets.

A call to a spokeswoman for Silver Lake Sumeru was not immediately returned by press time.

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• Restructurings