by Anton Shilov
04/30/2007 | 06:37 PM
The world’s second largest supplier of x86 microprocessors, Advanced Micro Devices, has announced that it had succeeded in closing $2.2 billion offering of convertible senior notes and is now capable to pay its debts and operation costs for several quarters. The announcement may also mean that the recent rumours about takeover of AMD will remain rumours and the company will stay independent for at least several quarters.
<%BANNER[article]%>AMD estimates that the net proceeds from the offering, will be approximately $2169 million, after deducting discounts, commissions and estimated offering expenses. AMD used approximately $182 million of the net proceeds of the offering to fund the cost of the capped call transactions. AMD used $500 million of the remaining net proceeds to repay a portion of the term loan AMD entered into with Morgan Stanley Senior Funding, to finance a portion of the purchase price of, and expenses related to, the acquisition of ATI Technologies. AMD will use the remaining amount for general corporate purposes, including working capital and capital expenditures.
The company has raised nearly $2.2 billion for 6% convertible senior notes due 2015 and set the so-called cap price of $42.12 per share, which means that the firm will only have to transfer its shares worth $2.2 billion to its investors only after they hit $42.12 price-point. Currently AMD’s stock is valued at $13.82.
It is interesting to note that AMD did not use similar instruments to fund its existence back in late-2002 – early-2003 period when it also faced fierce war from Intel with product portfolio that was not as good as its larger rival’s. AMD’s highest price of stock in the last five years was above $40 in the first quarter of 2006, while the lowest was below $13 this March. The company’s stock cost about $4 in October, 2002, but started to quickly grow in mid-2003 once the company launched its AMD Opteron processor.
AMD hopes that its next-generation chip code-named