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Weighing AMD's Replacement Financing Pact
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Old 10th August 2007, 04:32   #1
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Default Weighing AMD's Replacement Financing Pact

The company priced $1.5 Billion worth of 5.75% convertible notes, and it did it a time where the credit markets are demanding far more than just a few months ago. The notes will be convertible into shares of common stock based on an initial conversion rate of 49.6771 shares per $1,000 principal amount of notes, which is equivalent to an initial conversion price of approximately $20.13 per share. This initial conversion price represents a premium of approximately 50% relative to yesterday's close of $13.42 per share. Holders of the notes may require AMD to repurchase the notes for cash equal to 100% of the principal amount to be repurchased plus accrued and unpaid interest upon the occurrence of certain designated events (in other words there is still a death put, so to speak). AMD intends to use the net proceeds of the offering, together with available cash, to repay in full the outstanding balance of the term loan AMD entered into with Morgan Stanley Senior Funding, Inc. in October 2006.

The prior deal, which went from $1.8 Billion up to $2.2 Billion carried a 6% coupon on the convertible note and didn't mature until 2015. But the prior conversion price was $42.12 subject to capped call provisions. The most surprising part of that offering was that it seemed like the investment bankers would have had to do whatever the could to keep from laughing when they sold the deal to AMD and to the buyer of the notes.

http://www.247wallst.com/2007/08/weighing-amds-r.html
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