8-KMaterial AgreementsFinancial EventsExhibits & Filings

ADVANCED MICRO DEVICES INC 8-K Report, Material Agreement (Jun 10, 2019)

Filed June 10, 2019For Securities:AMD

Summary

Advanced Micro Devices, Inc. (AMD) announced on June 10, 2019, the execution of a new $500 million secured revolving credit facility. This facility matures in five years and includes subfacilities for swingline loans and letters of credit, offering significant financial flexibility. Crucially, the company has the option to expand this facility or incur additional debt under certain conditions, demonstrating a proactive approach to managing its capital structure and funding future growth. The new credit agreement replaces a previous arrangement and is secured by a lien on substantially all of the Company's and its guarantors' property, excluding intellectual property. The collateral and guarantees can be released upon achievement of certain corporate ratings from major credit agencies, indicating a path towards unsecured financing as the company's financial standing improves. The agreement also includes customary financial covenants and events of default, typical for corporate credit facilities.

Key Highlights

  • 1Entry into a new $500 million secured revolving credit facility with a five-year maturity.
  • 2The facility includes a $50 million swingline subfacility and a $75 million letter of credit sublimit.
  • 3Potential to increase the revolving facility or incur incremental debt up to certain thresholds, subject to conditions.
  • 4Borrowings bear variable interest rates (LIBOR or base rate) plus an applicable margin, with commitment fees on undrawn amounts.
  • 5Obligations are secured by a lien on substantially all company property (excluding intellectual property) and guaranteed by certain subsidiaries.
  • 6Provisions for collateral and guarantee release based on achieving specific corporate credit ratings (e.g., Ba1/BB+/BB+).
  • 7Termination and full repayment of all outstanding obligations under the previous Amended and Restated Loan and Security Agreement dated April 14, 2015.

Frequently Asked Questions

The new $500 million revolving credit facility provides AMD with enhanced financial flexibility, ensuring access to capital for general corporate purposes, working capital needs, or potential future investments. It also signifies a strengthening of the company's credit profile as it replaces an older agreement.

The facility is a $500 million, five-year revolving loan, featuring a $50 million swingline subfacility and a $75 million sublimit for letters of credit. Interest rates are variable, based on LIBOR or base rate plus an applicable margin, and there are fees on undrawn amounts. The agreement also allows for potential increases in the facility size or incurrence of additional debt under specific conditions.

The obligations under the Credit Agreement are secured by a lien on substantially all of the Company's and its guarantors' property, with the exception of intellectual property. Guarantees are provided by AMD International Sales & Service, Ltd. and potentially future domestic subsidiaries.

The collateral and guarantees can be released if AMD achieves a corporate rating of at least Ba1/BB+/BB+ from at least two of Moody's, S&P, and Fitch, and meets other conditions related to debt levels and absence of defaults. This suggests a pathway for the company to move towards unsecured debt financing as its creditworthiness improves.