AMD Announces Extension of Tender Offer for Its 8.125% Notes

[btarunr]

AMD (NYSE: AMD) today announced that in connection with its previously announced tender offer (the "Tender Offer") and consent solicitation (the "Consent Solicitation") with respect to any and all of its outstanding 8.125% Senior Notes due 2017 (the "8.125% Notes"), each commencing on June 2, 2014, AMD has extended the deadline by which holders of the 8.125% Notes ("Holders") may early tender their 8.125% Notes and receive an additional payment of $20.00 for each $1,000 principal amount of 8.125% Notes purchased pursuant to the Tender Offer (the "Consent Payment") in accordance with the terms of the Tender Offer (the "Consent Payment Deadline"), for an aggregate purchase price of $1,045.88 per $1,000 principal amount of 8.125% Notes.

The Consent Payment Deadline has been extended to 12:00 midnight, New York City time, on June 19, 2014 (the "New Consent Payment Deadline"). The Consent Payment Deadline for the Tender Offer was previously 12:00 midnight, New York City time, on June 13, 2014. As of that time, $135.3 million, or 48.5%, of the $278.9 million outstanding aggregate principal amount of the 8.125% Notes have been tendered and have consented, which is approximately $4.1 million principal amount fewer tendered 8.125% Notes than required to reduce the redemption notice period for the 8.125% Notes from 30 calendar days to 3 business days. The current redemption price is $1,040.63 per $1,000 aggregate principal amount of 8.125% Notes. Withdrawal rights for Holders expired at 12:00 midnight on June 13, 2014 and are not being extended.

Holders who validly tender their 8.125% Notes on or prior to the New Consent Payment Deadline will be entitled to the Consent Payment. Except for the extension of the Consent Payment Deadline to the New Consent Payment Deadline, all other terms and conditions of the Tender Offer and Consent Solicitation remain the same. The Tender Offer will expire at 12:00 midnight, New York City time, on July 3, 2014.

AMD has retained J.P. Morgan Securities LLC to act as the Dealer Manager for the tender offer and as Solicitation Agent for the consent solicitation. Questions regarding the tender offer may be directed to J.P. Morgan Securities LLC at (800) 245-8812 (toll-free) or (212) 270-1200 (collect). Requests for the Offer to Purchase and Consent Solicitation and other documents relating to the Tender Offer may be directed to MacKenzie Partners, Inc., the Information Agent and Depositary in connection with the Tender Offer, at (800) 322-2885 (toll-free) or (212) 929-5500 (collect).

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[Sony Xperia S]

AMD and nvidia for that matter are in deep trouble, it seems:

Graphics card shipments to drop 30-40% in 2Q14

http://www.digitimes.com/news/a20140616PD205.html

Not surprising given that less people need them, and prices go sky rocket ...

 

[rtwjunkie]

AMD and nvidia for that matter are in deep trouble, it seems:

Graphics card shipments to drop 30-40% in 2Q14

http://www.digitimes.com/news/a20140616PD205.html

Not surprising given that less people need them, and prices go sky rocket ...

I wouldn't worry too much about either of them. The reduction in shipments will still get them sales as existing vendor stock is sold, and then it should be back to normal in about 6 months. It's just supply and demand at work.

 

[Jorge]

The senioe note payoff is just a means to reduce debt because AMD has the cash to do so.

 

[Steevo]

They are trying to keep their profits at bay by purchasing back these debt notes from investors, no profit = no tax liability, and allows them to extend their viability into the future by reducing future debt. It also makes them more appealing to buy.

 

[tokyoduong]

They are trying to keep their profits at bay by purchasing back these debt notes from investors, no profit = no tax liability, and allows them to extend their viability into the future by reducing future debt. It also makes them more appealing to buy.

No, actually they are going to push that debt with another note out to 2019 or beyond. If you look through all their refinancing in the past 6 months, it's been the same pattern. They are refinancing with lower interest rates and delaying debt. Basically, reducing interest expense while maintaining the same debt but reduce near term liability/risks.

This last note at 8.125% is the only note due within 5 years. The next note is due late 2019, then there's several at 2020+. They will open a new lower interest note to replace this 8.125%. AMD wants to keep their cash at $1B, they don't have money to actually pay off any outstanding notes yet.

This is no different than refinancing your house when interest rates are low.

 

[fortiori]

No, actually they are going to push that debt with another note out to 2019 or beyond. If you look through all their refinancing in the past 6 months, it's been the same pattern. They are refinancing with lower interest rates and delaying debt. Basically, reducing interest expense while maintaining the same debt but reduce near term liability/risks.

This last note at 8.125% is the only note due within 5 years. The next note is due late 2019, then there's several at 2020+. They will open a new lower interest note to replace this 8.125%. AMD wants to keep their cash at $1B, they don't have money to actually pay off any outstanding notes yet.

This is no different than refinancing your house when interest rates are low.

Good point, and given the current low rate environment and investors' frantic search for yield i can't see many note holders taking them up on it (short of being desperate for liquidity or expecting AMD to experience an ELE within the next few years.)

With regard to the lower shipments of cards, i think both GPU teams are in for a rough ride going forward. Having the ongoing performance of your products tied to shrinking nodes at this point is just a recipe for disaster, and sales will just continue to stagnate as product release schedules move farther and farther apart on the calendar.

 

[Steevo]

No, actually they are going to push that debt with another note out to 2019 or beyond. If you look through all their refinancing in the past 6 months, it's been the same pattern. They are refinancing with lower interest rates and delaying debt. Basically, reducing interest expense while maintaining the same debt but reduce near term liability/risks.

This last note at 8.125% is the only note due within 5 years. The next note is due late 2019, then there's several at 2020+. They will open a new lower interest note to replace this 8.125%. AMD wants to keep their cash at $1B, they don't have money to actually pay off any outstanding notes yet.

This is no different than refinancing your house when interest rates are low.

No doubt they are also moving some out, but every large business does this, they are trying now to wash out profits, look at their last reporting, were it not for the last wash they did they would have made more, and lost the tax benefit, while they are making chips for multiple consoles, good graphics cards, and new APU's that have a great price/performance ratio they have enough incoming cash flow to do this. And considering the notes aren't yet due, but they are offering above market money for them, if they were financially strapped they would be borrowing more money, instead they are using their extra income to buy back long term debt, and are not refinancing equal amounts.

It is much different than refinancing your home, this is like paying off a second or third mortgage early.

 

[tokyoduong]

No doubt they are also moving some out, but every large business does this, they are trying now to wash out profits, look at their last reporting, were it not for the last wash they did they would have made more, and lost the tax benefit, while they are making chips for multiple consoles, good graphics cards, and new APU's that have a great price/performance ratio they have enough incoming cash flow to do this. And considering the notes aren't yet due, but they are offering above market money for them, if they were financially strapped they would be borrowing more money, instead they are using their extra income to buy back long term debt, and are not refinancing equal amounts.

It is much different than refinancing your home, this is like paying off a second or third mortgage early.

Check their latest 8K filing. AMD just issued 7.00% $500M notes due 2024. This replaced the the $500M 2017 8.125% note they just pulled back.

They offered people above market(extra 2%) to pull it back. Sure that's more money. The thing is that 7% interest is substantially lower and it is for the next 10 years. The extra 2% they paid to pull back the notes is just this one time instead of recurring.

Like I said, they're just keeping the same debt but lowering interest expense. AMD cannot pay back debt at the moment until they are more profitable. That won't happen until 2015 or 2016.

I do accounting and business analysis. It's clear as day what AMD is doing. A recent interview with their CFO confirmed that.