AMD looks to raise $2.2bn from investors

Less than a week after disclosing a $611m (£305m) first quarter loss, chip maker Advanced Micro Devices (AMD) said it hoped to raise up to $2.2bn (£1.1bn) through the sale of convertible notes to institutional investors.

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Less than a week after disclosing a $611m (£305m) first quarter loss, chip maker Advanced Micro Devices (AMD) said it hoped to raise up to $2.2bn (£1.1bn) through the sale of convertible notes to institutional investors.

AMD will offer an initial $1.8bn (£900m) in convertible notes and will offer buyers an option to purchase an additional $400m (£200m) in notes. The company plans to negotiate the interest rate and other terms of the notes with the purchasers.

At least $500m (£250m) from the funds raised through this offering will be used to pay back part of a loan from Morgan Stanley Senior Funding for AMD's acquisition of ATI Technologies. The remainder of the funds will be used for general corporate expenses, including capital expenditures, AMD said.

AMD has taken a financial beating in recent months. The company reported a first quarter loss of $611m (£305m) -- more than double what analysts expected to see -- on revenue of $1.23bn (£600m). And the outlook for the current quarter is not encouraging: AMD last week predicted its second-quarter revenue will be "flat to slightly up."

At the same time, AMD reported its cash position at the end of the first quarter on 41 March was $1.17bn (£580m).

The notes offering will greatly increase the amount of long-term debt that AMD holds. The company could see its debt rise from $3.7bn (1.8bn) at the end of the first quarter to $5.4bn (£2.7bn), if the offering is successful and purchasers exercise the option to buy additional notes.

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