ATIC Increases Stake in Globalfoundries

AMD Now Controls 14% of Its Contract Manufacturer

by Anton Shilov
12/28/2010 | 03:48 PM

Advanced Technology Investment Company (ATIC), an investment company controlled by the government of the Emirate of Abu Dhabi, this week increased its stake in Globalfoundries, a contract maker of semiconductors owned by ATIC and Advanced Micro Devices. The two companies also amended their shareholders and funding agreements as a result of the change.

 

As a result of the final consolidation of Globalfoundries and Globalfoundries Singapore (formerly Chartered Semiconductor Manufacturing), the share of Advanced Micro Devices in the manufacturer of its processors dropped to 14%, whereas the share of ATIC increased to 86%. The Abu Dhabi-based investment company said earlier this year that it would gradually increase its stake in the contract maker and the new agreements between AMD and ATIC confirm the plan.

Subject to certain exceptions set forth in the new shareholders’ agreement, the AMD's right to designate one representative to the Globalfounfries board of directors will continue for at least two years following the date on which AMD's ownership in the contract manufacturer, on a fully converted to GF ordinary shares basis, falls below 10%, the point at which AMD previously lost the right to such board representative.

For each equity funding under the funding agreement on or after November 17, 2010, the securities issued in consideration thereof will consist solely of GF’s class A preferred shares. In addition, the purchase price per class A preferred share will now be determined by dividing GF’s net tangible assets (derived from its most recent fiscal year-end audited consolidated balance sheet) by GF’s total number of outstanding preferred shares (assuming the conversion of any outstanding GF class A subordinated convertible notes into class A areferred shares and class B subordinated convertible notes into class B preferred shares as of the date of the balance sheet referred to above and multiplying by 1.10. Prior to November 17, 2010, the funding multiple was 0.90.

In addition, starting with the first fiscal quarter of 2011, AMD will begin accounting for its investment in Globalfoundries under the cost method and will no longer recognize any share of the maker’s net income (loss) in its statements of operations.

As a result of the consolidation between Globalfoundries and Globalfoundries Singapore, AMD expects to recognize in the first fiscal quarter of 2011 a non-cash gain related to the dilution of its equity interest in the manufacturer, the exact amount of which cannot be determined at this time, the firm said.