Elpida Memory Falls in Tokyo on Report of Delay of Public Funds Repayment

By Yuki Yamaguchi - Dec 29, 2011 1:36 PM GMT+0700

Elpida Memory Inc. (6665), the Japanese computer-chip maker being reorganized with government support, fell in Tokyo trading after the Asahi newspaper said it may seek a delay in repaying public funds. 　　Elpida, the nation’s largest maker of dynamic random access memory, dropped 5.1 percent to 351 yen at the 3 p.m. close of trading, the biggest decline since Dec. 19. The company, whose shares have tumbled 63 percent this year, declined to comment in an e-mailed statement to Bloomberg News. 　　“If the report is true, the thought that Elpida is having difficulty with financial arrangements led investors to sell,” said Yuichi Ishida, an analyst at Mizuho Investors Securities Co. in Tokyo. 　　Elpida received 30 billion yen ($386 million) of public funds through the state-run Development Bank of Japan to restructure its business, in addition to 100 billion yen in loans from private banks. The company will consider asking the Ministry of Economy, Trade and Industry to extend the timeline for repayment of the public funds, Asahi reported today, without citing anyone. 　　“We don’t comment on rumors or speculation,” Elpida said in the e-mailed statement. 　　Tetsuro Okita, a spokesman at the Development Bank, declined to comment, citing the bank’s policy not to discuss individual company matters.

Yield Spread

　　The extra yield investors demand to own Elpida’s convertible bonds due October 2015 over the yen swap rate jumped 418.3 basis points to 1,498 today on the Tokyo Stock Exchange. Elpida has about 240 billion yen of debt due next year, according to Bloomberg data. 　　The company reported a net loss of 56.8 billion yen in the six months ended September, compared with a profit of 39.9 billion yen a year earlier, partly due to the worsening market for DRAM chips and the stronger yen, which reduces the value of repatriated earnings from overseas. 　　The price of the benchmark DDR3 2-gigabit DRAM fell 52 percent this year to 88 cents, according to data from Taipei- based Dramexchange Technology Inc.

To contact the reporter on this story: Yuki Yamaguchi in Tokyo at yyamaguchi10@bloomberg.net

To contact the editor responsible for this story: Anand Krishnamoorthy in Singapore at anandk@bloomberg.net