ChipMOS in definitive agreement with Citigroup

HSINCHU, TAIWAN: ChipMOS Technologies (Bermuda) Ltd, a wholly owned subsidiary of ChipMOS, has entered into a definitive Transfer Of Claim Agreement to sell to Citigroup Financial Products Inc. the general unsecured claim reflected in the proof of claim against Spansion Inc., Spansion Technology LLC, Spansion LLC, Spansion International Inc. and Cerium Laboratories LLC filed by ChipMOS Taiwan in United States Bankruptcy Court.

The claim that is the subject of the Agreement includes accounts receivable for testing and assembly services provided to Spansion in the amount of approximately $66 million to $70 million. The purchase price for the Undisputed Claim is approximately $33 million.

At closing, Citigroup will pay an initial purchase price for the Undisputed Claim to an escrow agent to be held in escrow. The escrow agent will release the initial purchase price to ChipMOS Taiwan 20 days after the closing date, so long as no objection to ChipMOS Taiwan's transfer of the claim to Citigroup is filed in the Spansion bankruptcy proceeding prior to the end of the escrow period.

If an objection to the claim transfer is filed in the proceeding prior to the end of the escrow period, the Undisputed Claim will be repurchased by ChipMOS Taiwan, the escrow agent will pay the Undisputed Claim purchase price to Citigroup and the agreement to sell the Undisputed Claim to Citigroup will terminate.

The Agreement also includes the sale of breach of contract and liquidated damages rights against Spansion in the amount of approximately $234 million. The purchase price for the Damages Claim is expected to be an amount that would be determined based on a Purchase Rate of 50.2 percent multiplied by the portion of the Damages Claim that is allowed by a final adjudication of the United States Bankruptcy Court. The purchase price for the Damages Claim is payable to ChipMOS Taiwan to the extent that the Court allows this claim.

If an objection to the claim transfer is filed in the Spansion bankruptcy proceeding prior to the end of the escrow period, the agreement to sell the Damages Claim to Citigroup will terminate and the Damages Claim will not be transferred to Citigroup.

In furtherance of the Agreement, the Company also has entered into an agreement to subscribe for, purchase and transfer to Citigroup rights offering shares to be issued by Spansion according to the Second Amended Joint Plan of Reorganization filed in United States Bankruptcy Court. This agreement provides that Citigroup will pay to the Company the amount of the rights offering shares purchase price.