Summary
This 8-K filing from Advanced Micro Devices, Inc. (AMD) on April 26, 2004, details significant financing arrangements for its new 300-millimeter wafer fabrication facility, Fab 36, located in Dresden, Germany. The company is establishing AMD Fab 36 KG, a German limited partnership, to own and operate the facility, which is expected to produce future microprocessor generations and be in volume production by 2006. The total projected capital expenditure for Fab 36 over the next four years is approximately $2.5 billion. The filing outlines a multi-faceted financing structure involving AMD's equity contributions, loans from a consortium of banks led by Dresdner Bank AG, investments from unaffiliated limited partners (Leipziger Messe and Fab 36 Beteiligungs), and substantial grants and allowances from German federal and state authorities, potentially up to $660 million. AMD has provided a guarantee for AMD Fab 36 KG's obligations under the loan agreements and repayment of subsidies, indicating significant financial commitment and risk exposure for the company.
Key Highlights
- 1AMD is financing the construction of a new 300mm wafer fabrication facility, Fab 36, in Dresden, Germany, with an estimated capital expenditure of $2.5 billion over four years.
- 2Fab 36 is owned by a newly created German limited partnership, AMD Fab 36 KG, managed by AMD through a wholly-owned subsidiary.
- 3Financing for Fab 36 includes equity contributions and loans from AMD, investments from unaffiliated partners (Leipziger Messe, Fab 36 Beteiligungs), a bank consortium loan of up to $848 million, and significant German government grants/allowances (up to $660 million).
- 4AMD has guaranteed the debt obligations of AMD Fab 36 KG to the banks and the repayment of government subsidies, exposing AMD to substantial financial risk.
- 5The facility is planned to be in volume production in 2006, focusing on future microprocessor product generations.
- 6The loan agreements with the bank consortium are contingent on AMD Fab 36 KG achieving specific milestones, such as technical completion and capital expenditure targets.
- 7Partnership agreements detail capital contributions, a guaranteed rate of return for limited partners (11-13% per annum), and various option rights (call/put) and repurchase obligations for AMD concerning the limited partners' interests.