AMD to sell $300 mln convertible notes Tuesday
Tuesday November 19, 8:55 am ET
(New throughout)
SUNNYVALE, Calif., Nov 19 (Reuters) - Advanced Micro Devices Inc. (NYSE:AMD - News), the No. 2 computer chipmaker, said on Tuesday it plans to sell $300 million of senior notes convertible into company stock.
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The sale of the five-year notes is expected on Tuesday after U.S. markets close, people familar with the sale said.
AMD, based in Sunnyvale, California, said it expects to use net proceeds for general corporate purposes, including capital expenses and working capital. It said it may sell another $45 million of notes to meet demand. The company said it has registered with the U.S. Securities and Exchange Commission to sell up to $2 billion of securities.
The notes are expected to carry a 4.75 percent to 5.25 percent coupon and be convertible into AMD common shares at a 23 percent to 27 percent premium, the people familiar with the sale said. AMD cannot buy back the notes for three years.
AMD shares fell to $5.90 in premarket dealings from their close Monday on the New York Stock Exchange at $6.52. They have traded in a range of $3.10 to $20.59 in the last year.
A convertible bond is a stock-bond hybrid that usually offers current income and can be converted into company stock. Shares often fall after a company announces a convertible sale because some investors sell the underlying stock short and the bonds may dilute the stock.
AMD had about 343.5 million shares outstanding as of October 25, its quarterly report filed with the SEC shows, giving it a market capitalization of about $2.24 billion.
Banc of America Securities LLC and Salomon Smith Barney are arranging the note sale.
