AMD Looks to Raise $2.2B Through Debt Sale

Less than one week after disclosing a US$611 million first-quarter loss, chip maker Advanced Micro Devices (AMD) Monday said it hopes to raise up to $2.2 billion through the sale of convertible notes to institutional investors.

AMD will offer an initial $1.8 billion in convertible notes and will offer buyers an option to purchase an additional $400 million in notes. The company plans to negotiate the interest rate and other terms of the notes with the purchasers.

At least $500 million from the funds raised will be used to pay back part of a loan from Morgan Stanley Senior Funding for AMD's acquisition of ATI Technologies. The remainder will be used for general corporate expenses, including capital expenditures, AMD said.

AMD has taken a financial beating in recent months. The company reported a first-quarter loss of $611 million—more than double what analysts expected to see—on revenue of $1.23 billion. And the outlook for the current quarter is not encouraging: AMD last week predicted its second-quarter revenue will be "flat to slightly up."

At the same time, AMD reported that its cash position at the end of the first quarter on March 31 was $1.17 billion.

The notes offering will greatly increase the amount of long-term debt that AMD holds. The company could see its debt rise from $3.7 billion at the end of the first quarter to $5.4 billion, if the offering is successful and purchasers exercise the option to buy additional notes.

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