AMD Takes More Dept to Pay for Debt

"Chip maker Advanced Micro Devices Inc., said Monday it plans to offer $1.8 billion in convertible senior notes in a private offering."

I find this hilarious. AMD is offering convertible notes to private investors willing to 1) pay recent debt, 2) purchase cap call transactions 3) pay for capital expenditures to a money losing business. The prospects may not be at all that bad considering we're hearing that the conversion to common stocks is up to 3 times the current stock. Although the conversion and interest rates are variable per individual, AMD is putting a cap. The good news is, you get preference to assets just in case AMD goes BANKRUPT. I just can just imagine what sort of group of investors queing up for this offer. It's either private investors with a stake in AMD's business continuing (i.e., suppliers, partners) or investors who is waiting for AMD to close shop.

Assuming that there is enough people interested in this offer, this should allow AMD to continue for an additional few quarters. While this may be a temporary relief for AMD, one thing that bears emphasis is the fact that NOBODY was willing to lend AMD any more money. AMD was forced to dilute its shares. This is significant in business. The moment that nobody is willing to loan you money and you have stacks of debt, chapter11 is next.


Anonymous said...

It sounds crazy but Morgan Stanley might actually go for this. They get a portion of their money back thanks to the loan anyway. If AMD goes BK then Morgan Stanley basically owns the whole company.

Anonymous said...

The problem is Morgan Stanley doesn't care about processors. they care about their money. They will sell AMD quickly if they think it will only continue to make loses.

Does anyone really think AMD will make money?

ZDNET ran a story about the average worker earning more money than AMD over the last 30 years.