AMD looks to raise up to $2.2 billion

Sunnyvale (CA) - AMD has begun offering investors convertible senior notes, which could result in a $2.2 billion cash infusion.

The announcement arrives less than a week after the company announced the second quarter with heavy losses in a row. Including Q4 2006, the company had to swallow a net loss of $1.138 billion for the last two quarters, which brought down the firm’s cash reserves to about $1.2 billion at the end of Q1.

Despite the fact that the company said that it still feels comfortable with its available cash and that it considers a $600 million cushion as the acceptable minimum, the firm said during the Q1 conference call that it is "open" to discuss ways to raise additional capital.

The convertible senior notes offering comes much quicker than many had expected, but are interpreted as necessary move to help the company to endure another round of losses : AMD is likely to stay deep in the red in Q2 as a result of projected flat revenues and not much room to improve its margins.

AMD’s pitch covers $2 billion aggregate principal amount of 6.00% convertible senior notes, which are offered at a share price of $14.04 each. Initial purchasers can buy up to $200 million worth of additional notes within a 30-day period to cover over-allotments. The notes are due in 2015, but AMD said that they are convertible into cash up to the principal amount and shares of common stock "upon the occurrence of certain events" and the "equivalent to an initial conversion price of $28.08 per share."

AMD said that it expects the net proceeds from the offering to be approximately $1,972 million (or approximately $2,169 million if the initial purchasers exercise their over allotment option in full) after deducting discounts, commissions and estimated offering expenses.

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