Spansion Inc. ($SPSNQ) Surges +75%
Shares of Spansion Soar; Noteholders Attempt Block of Regorganization Plan
Shares of the world’s No. 3 maker of flash memory chip maker Spansion Inc. (OTC: SPSNQ) surged more than 75% in today’s trading. The penny stock reached a high of $0.05 in today’s trading and at last check was up by 64.64% to $0.0461, with volume up from daily average of 5.02 million to 13.51 million.
In March 2009 the company filed a voluntary petition for reorganization under Chapter 11 of the U.S. Bankruptcy Code. The stock was delisted from NASDAQ on May 7, 2009. On April 16, the company reported it received approval and confirmation of its Plan of Reorganization from the U.S. Bankruptcy Court, which will enable the company to emerge from Chapter 11.
Last week, the company reported its first-quarter results, posting first-quarter profit of $3.7 million on sales of $277.3 million. This is a significant improvement from the first-quarter of 2009, in which the company reported a loss of $512.6 million.
According to the company’s Plan of Reorganization approved on April 16, the company’s debtors will be reorganized through consummation of several transactions in which new securities of the Reorganized Debtors will be issued and distributed to satisfy creditor and provide working capital to fund operations.
One of transactions would involve cancellation of Spansion’s outstanding equity securities, including all shares of common stock and options to purchase shares of common stock. Subsequently, the company will distribute new common stock to holders of general unsecured claims.
In today’s mid-afternoon trading, holders of Spansion convertible notes asked a federal court to block the company’s approved bankruptcy plan that would wipe out their investments. According to the approved plan, holders of secured debt would get cash and new debt, while senior unsecured noteholders and holders of trade claims would get stock.
The convertible note holders said U.S. Bankruptcy Judge Kevin Carey didn’t consider the alternative plan, in which senior noteholders would be paid cash and holders of convertible notes would receive stock.
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