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AMD transaction sets stage for The Foundry Company

Posted: 05 Mar 2009 ?? ?Print Version ?Bookmark and Share

Keywords:transaction strategic? launch The Foundry? smart asset?

Advanced Micro Devices Inc. has closed its Asset Smart strategic transaction with the Advanced Technology Investment Company (ATIC) and Mubadala Development Company of Abu Dhabi. This sets the stage for the formal launch of the world's only U.S.-headquartered semiconductor foundry temporarily called "The Foundry Company." The Foundry Company is expected to formally launch and disclose its new name and visual identity this week.

AMD received $700 million from ATIC for a portion of its ownership interests in The Foundry Company. The Foundry Company assumed responsibility for the repayment of approximately $1.1 billion of associated AMD debt, and Mubadala paid AMD approximately $125 million for 58 million newly issued AMD shares and warrants for 35 million additional shares.

"With the close of this transaction, AMD and its partners have conceived two strong industry-leading companies capable of charting future courses that will dramatically improve the technology industry," said Dirk Meyer, AMD president and CEO. "Our 'Asset Smart' strategy is about more than providing AMD with long term access to world-class, leading-edge semiconductor manufacturing that is foundational to our growth strategy. It is about transforming the industry."

Upon the closing of the transaction, AMD improves its cash position by approximately $825 million (excluding its consolidation of the operations of The Foundry Company for financial reporting purposes) through ATIC's $700 million payment for a portion of AMD's ownership interests in The Foundry Company and Mubadala's purchase for approximately $125 million of 58 million newly issued AMD shares of common stock and warrants for 35 million additional shares. AMD will appoint a Mubadala designee as a member of its board of directors, and has the optionbut not any requirementto provide additional capital funding to The Foundry Company in response to future capital calls.

On the other hand, upon closing, The Foundry Company has a total enterprise value of approximately $4.3 billion, consisting of AMD's contribution of manufacturing assets and liabilities (including its fabrication facilities in Dresden), intellectual property and employees valued together at approximately $1.8 billion. ATIC's contribution to The Foundry Company is $1.4 billion in new capital. The new company approximately assumes $1.1 billion of debt from AMD, and will be consolidated with AMD for purposes of financial reporting. It has a board of directors whose membership is equally divided between representatives appointed by AMD and ATIC.

Moreover, The Foundry Company has only AMD and ATIC as stockholders, each of which owns 50 percent of the outstanding shares of The Foundry Company and has a 50 percent voting interest in The Foundry Company. It is owned 34.2 percent by AMD and 65.8 percent by ATIC on a fully converted to common shares basis. ATIC's fully converted ownership may increase over time based on the differences in securities held by AMD and ATIC, and depending on whether AMD elects to invest proportionately with ATIC in future capital infusions to support The Foundry Company's growth.





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