The deal announced last May to merge the loss-making NOR flash divisions of Intel and STMicroelectronics wasn’t as tightly sewn up as it might have been.
It would appear that the banks lined up to finance the May deal have found enough wriggle-room in the agreements to reduce their commitment to the project by almost half.
Instead of Numonyx getting a $1.3 billion loan and a $250 million revolving credit to finance the new entity, as announced in May, Numonyx will now get a $650 million loan and a $100 million revolving credit.
$900 million of that $1.3 billion was, under the May deal, going to be paid to Intel and ST. Now it appears that ST will get no more than $130 million in cash. Intel is not saying how much it expects to get.
The share of the $650 million loan which goes to Numonyx is not stated, but it is said that Numonyx will not get much less, i.e. $400 million, than it was going to get under the May deal.
The sum is paltry compared to the losses of the Intel and ST NOR flash operations. Intel's NOR flash operation, alone, lost around $600 million in the first half of 2007.
One wonders how Numonyx is going to pay for the equipping and ramping of the Catania 300mm fab shell which was said to be part of the Numonyx strategy.
ST and Intel say they have got ‘executed bank commitments’ for the financing of this new deal.
Hindsight is, of course, a fine thing, but it does seem that these executed bank commitments would have been a jolly good idea back in May.
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