Advanced Micro Devices, Advanced Technology Investment Company and Mubadala Development Company on Monday announced amendments to the agreement to create contract semiconductor maker presently known as the Foundry Company (TFC). Under the terms of the amendments, AMD will get lower share in TFC and will also receive less money from Mubadala for its shares.
Under the new terms of agreement between AMD and Mubadala, will purchase 58 million shares of AMD’s common stock at a revised purchase price per share equal to the lower of the average closing price per share of AMD’s common stock on the NYSE during the 20 trading days immediately prior to and including December 12, 2008 or the average closing price per share of AMD’s common stock on the NYSE during the 20 trading days immediately prior to the closing date of the transaction.
Originally Mubadala planned to increase its stake to 19.3% of outstanding AMD shares on a fully diluted basis. This would be accomplished through the purchase for $314 million of 58 million newly issued AMD shares (at $5.41 a share) and warrants for 30 million additional shares. Now, besides lower price-per-share, AMD will issue to Mubadala an additional 5 million warrants to purchase AMD stock, for a total of 35 million warrants.
At press time AMD’s share cost $2.06, up from $1.62 in late November, which was the lowest price for an AMD share in the last two decades.
The enterprise value of the manufacturing assets to be contributed by AMD to the Foundry Company will be reduced from a multiplier of 1.13x to 0.85x of the net book value of the assets. As a result, AMD will own approximately 34.2% and ATIC will own approximately 65.8% of TFC’s fully-converted common stock. AMD and ATIC will each have equal voting rights at the close of the transaction. The net asset valuation multiple on future capital calls of TFC will be reduced from 1.1x to 0.9x.
All other material economic terms of the transaction agreements remain unchanged. ATIC will still invest $2.1 billion to purchase its stake in the Foundry Company, of which it will invest $1.4 billion directly in the new entity and will pay $700 million to AMD.