by Anton Shilov
03/12/2013 | 11:19 AM
Advanced Micro Devices on Tuesday announced that it had entered into an agreement to sell and lease-back its “Lone Star Campus” located in Austin, Texas to Southwest Parkway Holdings, an affiliate entity of real estate investment company Spear Street Capital. Upon closing, net of all fees, the sale is expected to generate approximately $164 million in cash.
The sale of AMD’s Austin campus is in keeping with the company’s strategy to reduce investments and capital in non-core parts of the business, including real estate. In 1998, the company sold and currently leases-back its headquarters in Sunnyvale, California. In 2008, it sold and currently leases-back its major site in Markham, Ontario, Canada. Recently, AMD also began marketing the sale of its building 3 property located at 5900 East Ben White Boulevard in Austin, Texas. Building 3 is a largely unoccupied property whose operations and employees will be consolidated at other AMD sites.
The proceeds are expected to be reflected in the company’s first quarter 2013 financial statements when reported on April 18, 2013. At closing, AMD will enter into a 12-year lease with an extension option to continue its operations on the campus. The transaction is expected to close on or about Mar. 26, 2013.
AMD Lone Star campus in Austin, Texas. Image by Wildflower.org
“As we reset and restructure AMD for long-term success, we are taking a number of steps designed to optimize our business and monetize assets. The sale of our Austin campus will unlock a significant amount of capital, while the multi-year lease back of our Austin campus reconfirms our long-term commitment to the city that so many AMD employees have called home since 1979,” said Devinder Kumar, chief financial officer of AMD.
The company expects to record a special charge of approximately $50 million in the first quarter of 2013 primarily related to the difference between the sale proceeds and the carrying value of the property. AMD employs approximately 1900 people in Austin.
Late last year AMD initiated restructuring plan that reduces costs and allows AMD to achieve break-even point with $1.3 billion quarterly revenue. The company laid-off over 1700 employees this quarter and plans to further reduce headcount in early 2013.