Elpida Memory Inc. bondholders are urging a Japanese court to reject Micron Technology Inc.’s planned $2.5 billion takeover of the bankrupt memory-chip maker, saying the deal is “severely detrimental.”

The bondholders, claiming to represent Japanese and international pension funds, plan to propose an alternative to Micron’s deal, according to a copy of a filing in Tokyo District Court. Elpida filed for bankruptcy protection in February.

Micron, the Boise memory-chip manufacturer, agreed to buy Elpida on July 2 for $2.5 billion (200 billion yen) in a deal that would double the U.S. company’s share of the global market for dynamic random access memory, the most widely used memory chips in personal computers, to about 24 percent.

The deal would help Micron vie with industry leader Samsung Electronics Co. while giving it greater control over supply gluts that have caused it to report losses amid falling prices.

“The creditors cannot be compelled to accept a Micron transaction that produces a recovery below that which would result from a liquidation of the estate,” the bondholders said.

An Elpida spokesman declined to comment. Dan Francisco, a spokesman for Micron, didn’t immediately respond to a phone message and email.

Micron agreed to pay 60 billion yen in cash at the closing of the deal. The remaining 140 billion yen in future annual installments through 2019 will come from cash flow generated by Micron’s payments for chips made by Elpida, according to the July 2 statement.

Micron has said the installment payments will be interest-free, with no financial covenants, but the promise doesn’t seem legally binding, according to the bondholders. “Creditors cannot be confident that they will ever be made,” the bondholders said.

Micron will be able to burden Elpida with debt, jeopardizing future payments, according to the filing.

Micron also gets all of Elpida’s cash and working capital under the proposal, amounting to about 111 billion yen for its 60 billion yen upfront payment, the bondholders said.

“Elpida may be paying Micron for Micron’s equity investment,” the bondholders said.

Despite the objections, the bondholders aren’t likely to block the sale, analysts said.

“It would be difficult for bondholders to scuttle the deal,” said Koji Ishikawa, a lawyer at DLA Piper in Tokyo, who isn’t involved in the case. Still, “there may be room for negotiation if bonds are privately placed and have veto provisions,” he said.

“There may be a possibility for Micron to make some kind of consideration to bondholders,” said Katsuhide Takahashi, a credit analyst at Citigroup in Tokyo.

Micron, the largest U.S. maker of computer memory, won approval from the Tokyo District Court in May to negotiate to buy Elpida’s entire business after the Japanese company held two rounds of bidding. The July 2 agreement is subject to approval by the Tokyo court, which Elpida said it will seek in August. Creditors must also approve the agreement. The companies plan to complete the sale in the first half of 2013.

In a related transaction, Micron also agreed earlier this month to buy Taiwan-based Powerchip Technology Corp.’s 24 percent stake in DRAM maker Rexchip Electronics Corp. for about $334 million (10 billion New Taiwan dollars). Elpida already has a 65 percent stake in Rexchip.

Elpida sought protection from creditors in February after prices of DRAM chips plummeted. The lower prices and a stronger yen, which erodes the value of repatriated earnings from overseas, led the company to report a fifth straight quarter of losses. South Korea's SK Hynix Inc., the only company that had publicly expressed interest in buying Elpida at the time, decided not to participate in the second round of bidding.

DRAM prices are set to rise over the next two years, with supply growth below 40 percent, the bondholders said, citing a Deutsche Bank AG analysis of the market.

A translation of the bondholders' court filing was submitted July 9 in U.S. Bankruptcy Court in Wilmington, Del.