$4 Billion Semiconductor Asset Disposition
- Decreased cyclical demand for consumer electronic products such as laptops, smart phones and flat panel televisions, coupled with government-subsidized memory production from Taiwan and Korea, led Qimonda Richmond LLC, a supplier of semiconductor memory products, to file bankruptcy. Qimonda’s German parent had become insolvent and Qimonda needed operating funds to keep the facility’s equipment in a “warm state” while they worked to either sell the facility as a turnkey or dispose of the individual tools and real property.
- Since excess global capacity in semiconductor manufacturing was prevalent in early 2009, Qimonda’s state-of-the-art 300mm wafer production facility presented a unique challenge. At a project cost of nearly $4 billion, the wind-down of this 1.2-million-square-foot campus required both capital and expertise while operating within an extremely complex bankruptcy case.
- Qimonda solicited multiple firms to fund the wind-down and chose GB Merchant Partners, Gordon Brothers Group’s investment management affiliate. GB Merchant Partners leveraged the expertise of Gordon Brother Group’s Commercial and Industrial Division to quickly determine the value of Qimonda’s assets and extend Qimonda a DIP loan. This crucial Gordon Brothers Group internal relationship allowed Qimonda to quickly secure funding to maintain and protect the value of the facilities’ tools.
- The DIP loan allowed the facility to remain in a “warm” manufacturing state, which protected the value of the tools while determinations were made about how the disposition would be handled. Gordon Brothers Group proceeded to simultaneously search for both turnkey and individual tool buyers to ensure that Qimonda would obtain the best possible result.
- This was a highly complex, multi-asset global deal with a multitude of constituencies, including the debtors, DIP lenders and unsecured creditors, as well as multiple lessors, coupled with an extremely complicated bankruptcy structure. Gordon Brothers Group modeled out and executed a path to success that exceeded expectations. The firm was able to provide valuable guidance through a complicated bankruptcy environment that helped the debtor maximize recoveries and maintain good relationships with both the creditors and leasing companies.
- Virtually all of the semiconductor equipment was disposed of successfully over a 12-month period, along with the real estate. As a result of the rapid success in selling a significant portion of the tools to Texas Instruments, the disposition of these tools allowed Qimonda to exceed its time line projections and repay the DIP loan early and in full.
- Due to the orderly and well-managed disposition process, asset values were maximized and the debtor was pleased with the expertise and knowledge Gordon Brothers Group provided during this asset disposition.