AMD rests better after tender leaves $200 million of near-term debt

By Devika Patel

Knoxville, Tenn., Dec. 8 – Advanced Micro Devices, Inc. is closing the year with significantly less debt than it had a few months ago and the company believes that the actions it took to delever the balance sheet and reprofile its debt will help its executives “sleep a lot better at night,” with only $200 million of near-term debt due in 2019.

“Going back, even six months ago, previous to the financing transactions we did in September, the debt on the balance sheet is too much: $2.3 billion of debt on the balance sheet,” senior vice president, chief financial officer and treasurer Devinder Kumar said at the Barclays Global Technology, Media and Telecommunications Conference in San Francisco on Thursday.

“For the size of company that we are is way too much.

“We took the initial action to go ahead and do the financing transaction.

“Putting aside the debt on the balance sheet, more importantly, I think, look at the profile of the debt on the balance sheet.

“We had $1 billion-plus, $1.2 billion coming due in 2019 and 2020.

“Today, post the financing transactions, looking out over the next six years, there’s $200 million of debt that comes due in 2019 and for the next five and a half, six years, there is no term debt that’s coming due and on top of that, the ABL facility that we put in place in 2013 is available if we need the cash.

“We’re sitting with more than $1 billion of cash on the balance sheet, so from that standpoint, besides everything else that’s happened on the product line, there’s one thing I feel good about: 2016, as we end the year, is the actions we took on the balance sheet, to go ahead and delever the balance sheet a little bit, but also reprofile the debt from a viewpoint of what makes me sleep a lot better at night because I really worry about $1 billion of debt coming due in a couple of years,” Kumar said.

Debt tender

On Sept. 8, AMD priced an upsized $700 million of 10-year convertible senior notes at par to yield 2.125% with an initial conversion premium of 33%.

Morgan Stanley & Co. LLC, Barclays, Credit Suisse Securities (USA) LLC, BofA Merrill Lynch and Wells Fargo Securities LLC were the joint bookrunners.

The deal was increased from a planned $450 million.

On Sept. 28, the underwriters exercised the greenshoe, increasing the deal to $805 million.

Simultaneously AMD sold 100 million shares of common stock at $6.00 per share.

The greenshoe on the stock sale was also exercised, increasing the offering to 115 million shares, or $690 million of gross proceeds.

On Oct. 7, AMD completed a tender offer for its 6¾% senior notes due 2019, 7¾% senior notes due 2020, 7½% senior notes due 2022 and 7% senior notes due 2024.

Holders tendered $404,219,000 of the 6¾% notes, $241,954,000 of the 7¾% notes, $342,308,000 of the 7½% notes and $358,662,000 of the 7% notes.

AMD planned to accept for purchase $795.95 million of notes tendered by Sept. 22, the early tender date.

The issuer began the tender on Sept. 9 for a payment of up to $1,035,000,000 for the four series of notes with a cap of $25 million principal amount for each of the 7½% and 7% notes.

Of the early tendered notes, AMD said it accepted for purchase on Sept. 23 all of the 6¾% notes and 7¾% notes, $125 million of the 7½% notes using a proration factor of 36.6% and $25 million of the 7% notes using a proration factor of 7%. AMD dropped the maximum tender amount to $848 million on Sept. 23 and raised the tender cap for its 7½% notes to the amount purchased. The company also paid accrued interest up to but excluding the settlement date.

After early settlement on Sept. 23, there was left outstanding $196,004,000 of the 6¾% notes, $208,046,000 of the 7¾% notes, $350 million of the 7½% notes and $475 million of the 7% notes.

The company also obtained the needed consents to amend its 7¾% notes in order to reduce the minimum notice period for a redemption of the notes to three business days from 30 days.

As of the early deadline, holders had tendered $241,954,000 principal amount, or 53.77%, of the 7¾% notes and given the related consents, which was enough to amend the notes.

AMD redeemed the 7¾% notes that remained outstanding after the early settlement date on Sept. 28.

The company was offering the following amounts for notes tendered by the early deadline, with the securities listed in order of priority:

• $1,090.00 per $1,000 principal amount for the 6¾% notes;

• $1,027.08 per $1,000 principal amount for the 7¾% notes;

• $1,070.00 per $1,000 principal amount for the 7½% notes; and

• $1,030.00 per $1,000 principal amount for the 7% notes.

All the prices included an early tender premium of $50.00 per $1,000 principal amount of notes tendered by the early deadline.

The tender ended on Oct. 6.

AMD is a Sunnyvale, Calif., maker of semiconductors.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.