Gov't set to rescue Elpida through 30 bil. yen emergency investment+

TOKYO, June 29 Kyodo -
The government is set to rescue Elpida Memory Inc. through some 30 billion yen
($314.44 million) in investment, with the struggling chipmaker becoming the
first recipient under the state's emergency financial rescue program, sources
close to the matter said Monday.
The money will be invested through the stated-backed Development Bank of Japan.
The Ministry of Economy, Trade and Industry plans to announce the de facto
public-money injection on Tuesday, the sources said.
The emergency program comes as the government earlier revised the Law on
Special Measures for Industrial Revitalization to prevent the global economic
turmoil from increasingly hurting the balance sheets of companies widely
regarded as strategically important to the country.
The government apparently determined that the possible failure of Elpida, the
world's third-largest and Japan's sole maker of dynamic random access memory
chips, could have a negative impact on the wider economy, including
manufacturers to which the company supplies semiconductors. DRAMs are used in
such appliances as mobile phones and personal computers.
Under the program, the government is likely to require Elpida to compile and
implement a rehabilitation plan as well as to report to the government about
progress in its revamping efforts at least every quarter, according to the
sources.
Through its investment, the DBJ will acquire preferred shares in Elpida, and
depending on progress in the rehabilitation plan, the government-affiliated
bank will withdraw its investment.
In the event of the failure of such investments, the government says it will
cover 50 to 80 percent of losses incurred by the DBJ with taxpayers' money,
despite critics' warning that rescuing firms that should normally be culled
would be a moral hazard and impede industrial streamlining.
==Kyodo
2009-06-29 23:19:36