Crucial 2013 Annual Report Download - page 73

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The remaining 140 billion yen of installment payments are also to be deposited into accounts that are legally restricted for
settlement of the Elpida Creditor Installment Payments and will be directed by the trustees of the Elpida Companies to the
secured and unsecured creditors of the Elpida Companies. A portion of the amounts are also subject to adjustment for certain
expenses of the reorganization proceedings and certain other items. Additionally, settlements of certain pre-petition
intercompany obligations between Elpida, Akita and Rexchip are included in the amounts scheduled to be deposited into the
restricted cash account, but are eliminated in consolidation and therefore are excluded from our consolidated obligation to the
secured and unsecured creditors of the Elpida Group. Also, a portion of each installment amount payable to the creditors of the
Elpida Companies will continue to be restricted by the trustees of the Elpida Companies in the event that any outstanding
claims, which were not treated as fixed claims under the plans of reorganization at the time the plans were filed with the Japan
Court, become fixed claims. These fixed claims will be paid under the plans of reorganization in the same manner as the fixed
claims of other creditors. To the extent the aggregate amounts reserved from the installment payments exceed the aggregate
amounts payable with respect to these unfixed claims once they become fixed, the excess amounts reserved will be distributed
to unsecured creditors with respect to their fixed claims, resulting in an increased recovery for the unsecured creditors out of
the installment payments. To the extent the aggregate amounts reserved are less than the aggregate amounts payable with
respect to these unfixed claims once they become fixed, the Elpida Companies would be responsible to fund any shortfall to
ensure that the creditors receive the minimum recovery to which they are entitled under the plans of reorganization with respect
to these claims. As a result, there is a possibility that the total amount payable by the Elpida Companies to their creditors under
the plans of reorganization will exceed 200 billion yen. In addition, certain of these unfixed claims may be resolved pursuant
to settlement arrangements or other post-petition agreements and a substantial portion of the amounts payable under such
agreements may have to be funded by the Elpida Companies outside of the plans of reorganization.
The Elpida Creditor Installment Payments were recognized at the acquisition date fair value, which reflects the present
value of the Elpida Creditor Installment Payments, discounted using a rate based on indices of leveraged loan markets, adjusted
for security-specific risks of the installment payments. As of August 29, 2013, the discount is being accreted to interest
expense over the remaining term of the Elpida Creditor Installment Payments, resulting in an effective interest rate of 6.25%.
The following table presents the amounts scheduled under the Sponsor Agreement to be restricted for settlement of the
Elpida Creditor Installment Payments, the estimated amounts payable to the secured and unsecured creditors of the Elpida
Companies (stated in Japanese yen and U.S. dollars) and the amount of unamortized discount.
As of August 29, 2013
Scheduled
Deposits of
Restricted
Cash Estimated Payments to
Elpida Creditors
July 31, 2013 ¥ 60,000 ¥ — $ —
2014 — 52,270 532
2015 20,000 20,267 206
2016 20,000 20,135 205
2017 20,000 20,003 204
2018 20,000 19,871 202
2019 30,000 28,508 290
2020 30,000 32,242 330
¥ 200,000 ¥ 193,296 $ 1,969
Less unamortized discount (325)
Elpida Creditor Installment Payments $ 1,644