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AMD to Place $1.8 Billion in Convertible Notes

Part of the proceeds will fund the ATI deal.
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Advanced Micro Devices (AMD) - Get Advanced Micro Devices, Inc. Report plans to offer $1.8 billion in convertible senior notes in a private offering to institutional buyers.

AMD expects to use capped call transactions to reduce the potential dilution to shareholders upon any conversion of the notes.

AMD expects to use a portion of the net proceeds of the offering to pay the cost of the capped call transactions. If the initial purchasers exercise their option to purchase additional notes, AMD expects to use a portion of the net proceeds from the sale of additional notes to enter into additional capped call transactions.

AMD expects to use at least $500 million of the remaining net proceeds of the offering to repay a portion of the term loan entered into with Morgan Stanley Senior Funding to finance a portion of the purchase price of, and expenses related to, the acquisition of ATI Technologies. AMD expects to use any amounts not applied to the repayment of the term loan for general corporate purposes, including working capital and capital expenditures.

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Shares of AMD were off more than 2% to $13.75 in recent after-hours trading. Last week, the company shocked Wall Street by reporting a first-quarter loss of $611 million, while its cash position dropped 24% to $1.17 billion.