backtop


Print 65 comment(s) - last by Aerius.. on Aug 13 at 6:32 PM

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.



Comments     Threshold


This article is over a month old, voting and posting comments is disabled

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.


"Young lady, in this house we obey the laws of thermodynamics!" -- Homer Simpson

Related Articles
AMD Reports Q2 Revenue
July 19, 2007, 5:28 PM
AMD's Large Debt Mounting Up Fast
April 29, 2007, 1:54 PM













botimage
Copyright 2014 DailyTech LLC. - RSS Feed | Advertise | About Us | Ethics | FAQ | Terms, Conditions & Privacy Information | Kristopher Kubicki