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AMD to issue $2.2 billion USD in Convertible Senior Notes

AMD is a company that has been strapped for cash lately. In late April, the Sunnyvale, CA based company announced that it would offer Convertible Senior Notes to raise around $2.2 billion USD. AMD set a conversion point of $42.12 USD per share at a time when its stock price was $14 USD.

The company's efforts to raise more cash have intensified even further. Yesterday, AMD priced an additional $1.5 billion USD in Convertible Senior Notes at a conversion point of $20.13 USD per share. The conversion price represents a 50 percent premium over AMD's $13.42 USD stock price at close of day on August 8.

AMD plans to use the funds received from the offering to pay an outstanding balance on a loan from Morgan Stanley Senior Funding in late 2006. The company borrowed around $2.5 billion USD in loans and $1.2 billion USD in common stock to fund the $5.4 billion purchase of ATI Technologies. The company also reported a net loss of $600 million USD last quarter while archrival Intel reported net income of $1.3 billion USD.

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RE: Sold, or will sell?
By mmarq on 8/10/2007 1:56:58 PM , Rating: 2
Is this an announcement that AMD sold the bonds, or that they plan to sell them? I read the article but don't understand the phrasing.

Those are not stock. Those are notes. They are convertible to stock after a period of maturity, and it could be a very good deal, even more because AMD pay interest on those notes...

The conversion parity seems to be a little high now, but the market is extremely volatile..., it could mean a good profit to investors in any case, because those notes are redeemable at the fixed points.

" believe me, because of all that interest or dividend upon those notes (6 to 6 months), IT IS AN INCREDIBLE SAVE INVESTMENT CONSIDERING PRESENT MARKET STATUS, maybe not as lucrative as the ' risky ' speculative 'buy-to-sell' of stock, but could be very lucrative anyway."

So AMD pay interest just like bonds, though those notes are not bonds, they are not going to the open market... that is, you have to subscribe, and AMD has to accept.

It seems to me that the financial market interests want to kill AMD. Look how 'they' depreciated AMD credit rating just after announcements of getting rid of debt and of a superior product(K10):

So AMD is playing to raise their liquidity(cash) and lower their debts, in a very lawful way, that could be lucrative to investors to.

If i had enough money available now i would buy those notes. period. Not because of fanboyism or something like that, but because of the good deal.

And it could be even more safe and lucrative, because investors are not dependent of market weasels , but they themselfs can force the hand if they buy AMD products and campaign to 'close friends and relatives' to buy them to. When the notes mature they could reap a god profit on top of the interest payed...

... yes it could be considered like fanboyism, but its only investment protection anyway... everybody wanna and should be doing exactly that with every 'paper'... if it weren't for the selfish interests of the speculative market.

And that is why AMD came up with this 'notes' deal... almost like in a private fashion( to cut off the speculative element and put some power in the hands of investors).

Ok its not 100% infallible, mean profit absolutely guarantied, but considering the volatility and speculation on open markets its far far more save... and if anyone can point to a deal that is 100% guarantied, them (s)he could start insulting me right now...

( though i wont bother answering, because i'm not advocating pro AMD, only the deal, because i would recomend anyone a similar deal with Intel instead of stock in the open market. )

RE: Sold, or will sell?
By Orthogonal on 8/10/2007 4:25:31 PM , Rating: 2
Hector Ruiz? When did you get an account and start posting on DT.

RE: Sold, or will sell?
By mmarq on 8/10/2007 5:52:51 PM , Rating: 2
Hello Paul!

... the same day when 'one' has heard that Paul Ottelini had did it... only to find out that ' one's buddy ' was already there a long time ago with his congregation!

RE: Sold, or will sell?
By mmarq on 8/10/2007 6:23:46 PM , Rating: 2
How rude of me...

I forgot to clearly elucidate my friend;

Stock market ?...

RE: Sold, or will sell?
By Ringold on 8/12/2007 4:18:18 PM , Rating: 2
After a massive bull market stretch back years, with the indexes still positive for the year, and you refer to it as a bloodbath?

Even the big-name commonly held mutual funds are still up huge for the year.

Not to mention long term average annual gains of around 10%.

Sorry, but any view other than long term market participation is way, way out of the mainstream. Not my fault if you bought a bunch of home builders, REITs or mortgage companies earlier this year ;)

RE: Sold, or will sell?
By crystal clear on 8/11/2007 2:43:08 AM , Rating: 2
These loans and notes and ratings makes AMD's accounts an absolute minefield.

S&P + Moodys both are giving negative ratings !

They are neither BIASED or DUMB IDIOTS.

RE: Sold, or will sell?
By mmarq on 8/11/2007 5:07:53 PM , Rating: 2
They are neither BIASED or DUMB IDIOTS.

Of course not. But they are the 'ones' being excluded somehow from this deal... what do you think they'll vote for ?

And this is the point i'm so glad about this deal, and not in here for sterile 'fanboyism' discussions. Finally some company has realized they don't need the S&P + Moodys of this world upon a crises!... absolutely great!

RE: Sold, or will sell?
By Aerius on 8/13/2007 6:32:30 PM , Rating: 2
I can’t tell if this is a joke post or one by some random kid who does not understand capital markets. Basically your post has too many errors to correct, but to hit a couple highlights:

1) According to your link, S&P raised the rating of unsecured debt, not lowered – so put away the tin foil hat; the outlook has was, and still is, negative.

2) On what grounds is it not ‘risky’? I think a company who blows through hundreds of millions of dollars and is running out of cash pretty risky. In case you didn’t know, if they go bankrupt you don’t make money. If they were a corp in tip top condition they wouldn’t have to make the notes convertible to get a decent yield.

3) The conversion price is at $42 (!!), AMD has closed that high a couple days ever. If you are that confident that you will be able to exercise at anything that high, just buy the stock – more upside. Your ‘get your fiends and family’ to buy comment cracked me up – you sure you aren’t some delusional fanboy? You think you can affect their bottom line in a material way?

4) If you want a 100% infallible investment consider TIPS, or some other kind treasury investment that is guaranteed by the government. Sure you won’t be getting 5.75%, but you will be getting something very close to that. Also note that the notes are unsecured, so who knows how much you would get in the case of some sort of liquidation or chapter 11 filing.

The offer is probably ‘fair’ as there are no free lunches and markets are reasonably efficient. There is some upside but also significant risk; to talk about it as if it was the deal of the century is rather comical.

"A politician stumbles over himself... Then they pick it out. They edit it. He runs the clip, and then he makes a funny face, and the whole audience has a Pavlovian response." -- Joe Scarborough on John Stewart over Jim Cramer
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