SAN FRANCISCO -- The flash memory joint venture between
will make its debut a few months later than originally planned, and will borrow about half as much in debt financing.
The companies announced Wednesday that the closing date for the deal has been pushed back until the first quarter of 2008, extending the termination date until March 28, 2008, vs. the original Dec. 31, 2007 deadline.
Instead of borrowing up to $1.55 billion from a consortium of banks, the joint venture's financing plans now involve a $650 million senior loan and a $100 million revolving credit facility.
In announcing the revised financing terms, ST Micro cited "the significant turmoil in the debt capital markets."
deal was originally struck in May, before the market for subprime loans and collateralized debt obligations began to sour, and the credit markets tightened.
The joint venture will create a private chip company to be called Numonyx, which will design and manufacture both NOR and NAND flash memory chips.
Intel will sell its NOR assets to the new venture, while Geneva, Switzerland-based STMicro will sell both its NOR and NAND assets. Francisco Partners, a private-equity firm, will kick in $150 million and get two seats on the company's eight-member board of directors.
Earlier this month, credit-rating agency Moody's assigned Numonyx a speculative-grade rating of B3, which is described as lacking "characteristics of a desirable investment."
With the new financing structure, Numonyx is expected to have a similar level of net cash, with lower indebtedness than originally anticipated, STMicro said Wednesday.
Shares of Intel were off 3 cents at $27.28 in midday trading Wednesday. STMicro shares were down 1.2%, or 18 cents, at $14.42.