Insolvent memory maker Qimonda announced it's in concrete negotiations with numerous international investors. The German firm filed for insolvency about a month ago and has until the end of March to find an investor, otherwise the chip maker will be liquidated.
Qimonda AG (OTC: QMNDQ) has maintained liquidity since applying to open insolvency proceedings on January 23, 2009, thus fulfilling the requirement necessary in order to continue operation preliminarily. At the same time, the Qimonda management and a team working for the preliminary insolvency administrator Dr. Michael Jaffé have been holding concrete discussions with numerous international interested parties. The aim is to have firm offers submitted as soon as possible. Following successful mass production of the first generation of the innovative Buried Wordline technology at the Dresden facility, the 46nm generation, potentially a leading technology in the industry, is now to be made ready for production in collaboration with an investor, with mass production to begin in summer 2009. Furthermore, intensive work is being put into financing options which would allow production to also continue for a limited period of several months after March 31, 2009. This would aid the company in successfully concluding the process of finding an investor, providing concrete indications of interest have been made by the end of March. The sale of investments is being prepared in parallel with the search for investors in order to generate liquidity to continue running the core business.
Since applying to open insolvency proceedings, the memory chip manufacturer has cut costs decisively and, with the agreement of the committee of creditors, focused the liquid funds which have become available on the development of the 46nm Buried Wordline technology. Meanwhile, the US subsidiaries Qimonda North America Corp. and Qimonda Richmond L.L.C. filed for creditor protection under Chapter 11 on February 20, 2009. No disruptions to operations, particularly to customer deliveries, are expected to result from this.
However, even if the search for an investor is successful, further restructuring measures and redundancies cannot be ruled out. Preliminary talks with the works councils in Dresden and Munich will begin this week in order to discuss the procedures for potential transitional or employee outplacement companies and support for the employees affected. The employees received statutory insolvency payments for the month of January in mid-February; the payment for the month of February is due in March. The employees are to receive salary payments from the statutory insolvency regime up to and including the month of March.
The company emphasises the special meaning Qimonda has for Germany as a high-tech location and is in continued negotiations with political decision makers in Saxony, Bavaria, Germany, Portugal and the European Union. The governments have signalled their willingness to participate in the financing if necessary, when Qimonda has found an investor for the company. "Our business plan demonstrates the sustainability of Qimonda. Qimonda's leading position in the DDR3-technology was just recently confirmed by Intel. We have to keep this technology in Germany"; said Kin Wah Loh, President and CEO of Qimonda AG.
A solution involving new investors must be found by end of March in order to assure the continuation of operations at Qimonda. No final decisions have yet been taken concerning the future structure of the company, including whether those of its businesses that can be continued will be held through Qimonda AG or placed in a new company owned by new investors. In the latter case, or if investors cannot be found to finance the continuation of Qimonda’s businesses, Qimonda AG would likely be liquidated.