What is the primary purpose of this 8-K filing?

This 8-K filing primarily announces the entry into a new material definitive agreement, specifically a $175 million revolving credit facility for Spansion LLC, a majority-owned subsidiary of AMD, and details an amendment to Spansion Japan Limited's credit agreement. It also reports the creation of a direct financial obligation for Spansion.

How will the new Spansion credit facility affect AMD's financial position?

The credit facility is for Spansion LLC and is secured by Spansion's assets, not directly by AMD. While Spansion is a majority-owned subsidiary, the direct financial impact on AMD's balance sheet is limited to its equity stake. However, the covenants and financial requirements for Spansion could indirectly influence AMD, especially as Spansion prepares for an IPO.

What are the key restrictions placed on Spansion by this new credit facility?

Spansion faces several restrictions, including limitations on mergers, sales of property (outside the ordinary course of business), making distributions, making significant investments (unless liquidity requirements are met), and incurring additional debt. These restrictions are typical for credit facilities, especially when a subsidiary is preparing for an IPO.

What impact does the Spansion Japan amendment have?

The amendment to Spansion Japan's credit facility has reduced its available loan amount from 15 billion yen to 10.5 billion yen (approximately $94 million as of September 20, 2005). This reduction is due to the exclusion of U.S. dollar-denominated accounts receivable from Fujitsu Limited from the collateral securing the facility.

AMD 8-K: Material Agreements & Financial Events

Summary

Advanced Micro Devices Inc. (AMD) has filed an 8-K report detailing significant financing activities related to its majority-owned subsidiary, Spansion LLC. On September 19, 2005, Spansion entered into a new $175 million revolving credit facility with Bank of America, N.A., as agent. This facility is secured by Spansion's accounts receivable and its Fab 25 facility in Austin, Texas, and is set to mature in September 2010. Borrowings are intended for refinancing existing debt and working capital. The report also outlines crucial covenants and restrictions Spansion must adhere to, including limitations on mergers, distributions, investments, and incurring additional debt, particularly in anticipation of Spansion's upcoming initial public offering (IPO). The facility includes financial performance covenants such as minimum liquidity requirements and EBITDA targets, which are subject to change based on Spansion's business projections post-2007. Furthermore, the filing notes an amendment to Spansion Japan Limited's credit agreement, which has reduced its available loan amount due to the exclusion of certain U.S. dollar-denominated accounts receivable.

Key Highlights

1Spansion LLC, a majority-owned AMD subsidiary, secured a new $175 million revolving credit facility with Bank of America on September 19, 2005.
2The credit facility is secured by Spansion's accounts receivable and its Fab 25 facility in Austin, Texas, with a maturity date of September 19, 2010.
3Proceeds from the credit facility are designated for refinancing existing indebtedness and working capital purposes.
4The agreement imposes significant restrictions on Spansion, including limitations on mergers, asset sales (outside the ordinary course of business), distributions, and incurring new debt, especially in preparation for an IPO.
5Key financial covenants include minimum liquidity requirements and escalating EBITDA targets that will be assessed quarterly, becoming more stringent over time.
6An amendment to Spansion Japan Limited's credit facility reduced its borrowing capacity by approximately $37 million (to $94 million) due to the exclusion of U.S. dollar denominated accounts receivable from Fujitsu Limited.
7Spansion borrowed approximately $60 million under the new revolving credit facility on the day of its agreement.

ADVANCED MICRO DEVICES INC 8-K Report, Material Agreement (Sep 23, 2005)

Summary

Key Highlights

Frequently Asked Questions