Spansion files for bankruptcy protection

Flash memory maker Spansion's Japanese arm filed for bankruptcy protection three weeks ago with total liabilities of $810 million, and yesterday the mother company and four US affiliates filed for bankruptcy protection in US bankruptcy court in Delaware, listing assets of $3.84 billion, and debts of almost $2.4 billion.

The company blames a sharp decline in demand and the tight credit market for its downfall.

The company is also exploring proposals from multiple parties seeking a "strategic transaction," it said in a statement. Fujitsu owns about 11.4 percent of Spansion, and Advanced Micro Devices owns about 8.7 percent.

Spansion, based in Sunnyvale, Calif., said it can fund expenses and business operations with its current and expected cash resources, but is also in discussions with its debtholders about obtaining debtor-in-possession (DIP) bankruptcy financing.

Spansion said in court documents, that oversupply in the chip market and sharp price drops for its products through 2007 had hurt cash flow from operations in 2007 and early in 2008 it said it lost liquidity due to about $122 million in sour auction-rate security investments.

The company experienced a "sharp decline" in demand again in the fourth quarter of 2008, which combined with tight credit market conditions and led to the bankruptcy filing, it said.

Full statement can be found at Spansion.