AMD raises cash through B-rated debt

Tuesday 24th April 2007, 12:46:00 PM, written by Arun

AMD has announced plans to offer up to $2.2 billion in convertible notes to raise capital. The debt will have a 'B' rating, given that the company was downgraded by Standard & Poor's on Monday, which should imply quite high interest rates. At least $500M of that will have to be used to repay previous debt that was raised to finance the ATI acquisition in October, due to contractual obligations.

This should keep AMD away from cash flow problems for a couple of extra quarters, although the interest expenses also risk eating into their longer-term bottom line. Rumours of Private Equity interest and/or Applied Materials wanting to buy the entire company keep circulating, although not much of anything reliable has leaked so far. It will be interesting to see if these rumours subside now that AMD is no longer in an immediate need of fresh cash.

amd ± financial

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