Qimonda Files to Open Insolvency Proceedings
IT News Online Staff
2009-01-23
Qimonda AG, a leading memory supplier with a diversified DRAM product portfolio, announced that it and Qimonda Dresden OHG have filed an application with the local court in Munich today to open insolvency proceedings.
Qimonda said the goal is to reorganize the companies as part of the ongoing restructuring program. The court will now appoint a preliminary insolvency administrator. The Qimonda Management Board intends to restructure key business units within the context of the insolvency regime.
"German insolvency law offers the opportunity to accelerate the restructuring process that has already been started in order to reposition the company back onto a solid base," said Kin Wah Loh, President and Chief Executive Officer of Qimonda AG. Qimonda possesses established products and, with its Buried Wordline technology, is currently bringing a promising future technology to the market.
The company said the insolvency petition is the result of the massive drop in prices in the DRAM industry and dramatically decreased access to financing on the capital markets, both of which have led to the deterioration of its financial position in recent months.
Qimonda said a financing package involving the Free State of Saxony, parent company Infineon, a leading Portuguese financial institution and additional banks could not be completed in time, despite intensive, but also very complex negotiations and financial support committed by customers over the past days and weeks. Furthermore, an increased need for financing for the current financial year recently became apparent as a consequence of the price decline in the December quarter and the fact that important investments needed for productivity improvements could not be made due to the delay in negotiations.
The temporary insolvency administrator will analyze the situation at Qimonda in the coming days. "We assume we will be able to continue our business within the context of our restructuring program with the support of the temporary insolvency administrator and our employees," said Loh. "We are especially counting on the excellent relationships with our customers and suppliers, with whom we have made significant progress in developing our Buried Wordline technology during the last months."
Qimonda already introduced a global restructuring and cost reduction program in October in order to reposition the company. The main focus of the program is to concentrate on core competencies, such as the innovative Buried Wordline technology, as well as the company's strong portfolio of infrastructure and graphics products.
The sale of its stake in Inotera in November 2008 was another important step, as this reduces exposure to the PC market and the associated cash outflow going forward. The ramp down of Qimonda's 200-mm production in Richmond (Virginia), USA and the backend manufacturing for components and modules in Dresden are on track. In addition, the company has consolidated its product development in Munich and Xi'an, and has started to reduce headcount and its administrative costs.
Qimonda said it has considerable potential for successful repositioning thanks to its Buried Wordline technology, a strong product portfolio, particularly in the areas of graphics and infrastructure, and more than 20,000 patents and patent applications.
The Qimonda Management Board said it will do its utmost, subject to the agreement of the preliminary insolvency administrator, to secure the financial funds necessary for the company's reorganization in negotiations with potential lenders and investors. Given Qimonda's technological strengths, the Board said it sees good chances for success.
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