Summary
Advanced Micro Devices, Inc. (AMD) announced on April 30, 2007, the successful closing of a significant financing event: the issuance of $2.2 billion aggregate principal amount of 6.00% Convertible Senior Notes due 2015. This offering was made in a private placement to qualified institutional buyers and marks a substantial capital infusion for the company. The net proceeds are earmarked for general corporate purposes, including working capital and capital expenditures, and a portion was used to repay $500 million of an existing term loan related to the ATI Technologies acquisition. Notably, AMD also entered into a capped call transaction to mitigate potential dilution from the convertible notes. This transaction, costing approximately $182 million, is designed to offset dilution if the stock price exceeds the conversion price, up to a cap price. The company has also committed to filing a shelf registration statement to allow for the resale of these notes and their underlying common stock, with penalties for delayed effectiveness. This move indicates a strategic effort to strengthen its financial position and manage its capital structure effectively.
Key Highlights
- 1AMD issued $2.2 billion in 6.00% Convertible Senior Notes due 2015.
- 2The notes were issued in a private placement, with net proceeds of approximately $2.169 billion after expenses and commissions.
- 3$500 million of the proceeds were used to repay a portion of the October 2006 Term Loan.
- 4A capped call transaction was entered into to mitigate potential dilution from note conversions.
- 5The initial conversion price of the notes is $28.08 per share, a 100% premium over the April 23, 2007 closing price of $14.04.
- 6AMD has agreed to file a registration statement for the resale of the notes and underlying common stock, with potential penalties for delays.
- 7The company expects to use remaining net proceeds for general corporate purposes, including working capital and capital expenditures.