Summary
Micron Technology, Inc. (MU) has filed an 8-K report detailing a significant financial arrangement related to its subsidiary, Numonyx B.V. On August 31, 2010, Numonyx entered into a guarantee, charge, and deposit agreement (GCDD) with DBS Bank Ltd. This agreement stems from a prior $250 million loan made by DBS to a joint venture (JV) in which Numonyx was a party prior to Micron's acquisition of Numonyx Holdings. The GCDD obligates Numonyx to guarantee the JV's loan payments to DBS and to deposit $250 million of proceeds from the sale of its stake in the JV into a pledged account at DBS to secure this guarantee. This action is a direct consequence of Numonyx's exit from the JV, which was finalized on the same day.
Key Highlights
- 1Numonyx B.V., a Micron subsidiary, entered into a guarantee, charge, and deposit agreement (GCDD) with DBS Bank Ltd. on August 31, 2010.
- 2The GCDD guarantees a $250 million loan previously made by DBS to a joint venture (JV) in which Numonyx was a partner.
- 3Numonyx has deposited $250 million from the sale of its JV stake into a pledged account at DBS to secure its guarantee.
- 4The liability of Numonyx under the GCDD is capped at the $250 million deposited amount, subject to limited exceptions.
- 5This agreement is directly linked to the consummation of the sale of Numonyx's stake in the JV, which closed on August 31, 2010.
- 6Numonyx received approximately $422.7 million for its stake in the JV, subject to adjustments for book value.
Frequently Asked Questions
The GCDD serves to secure a $250 million loan that DBS Bank provided to a joint venture (JV) in which Micron's subsidiary, Numonyx, was previously a partner. Numonyx is guaranteeing the loan payments of the JV and has secured this guarantee with a $250 million deposit.
Numonyx's liability under the GCDD is capped at the $250 million that has been deposited into the pledged account at DBS Bank. This means that, barring certain exceptions, Numonyx's maximum financial exposure is limited to this deposited amount.
Numonyx received approximately $422.7 million for the sale of its stake in the joint venture. This amount is subject to further adjustments based on the JV's actual book value of assets and liabilities as of the closing date.
The GCDD is a direct consequence of the sale of Numonyx's stake in the joint venture. Numonyx agreed to enter into the GCDD and make the $250 million deposit within two business days of receiving the proceeds from this equity transfer, which was finalized on August 31, 2010.