AMD to own less of chipmaking spinoff
The structure of the AMD manufacturing spinoff deal has changed. Company cites "changing economic times" as the reason.
Advanced Micro Devices will reduce its stake in the manufacturing operations it spun off in October, as it adjusts to repercussions of the financial crisis.
This followswhen the chipmaker revised its revenue estimate downward.
And like the shares of many companies, AMD's stock price has been in a free fall. Dropping from over $7 back in June to $2.10 on Monday.
Monday's action revolves around Abu Dhabi-based Mubadala Development and the Advanced Technology Investment Company (ATIC)--which Mubadala backs.
ATICwith AMD in the newly formed manufacturing concern, the Foundry Company, and--per the October agreement--had owned 55.6 percent of the new entity.
However, as a result of amendments between AMD and ATIC, AMD will own approximately 34.2 percent and ATIC will own approximately 65.8 percent of the Foundry Company's fully converted common stock, AMD said Monday.
"Changing economic times" is the reason for a change in the terms, an AMD representative said.
Other changes include a restructured agreement that now says Mubadala will purchase 58 million shares of AMD's common stock "at a revised purchase price per share equal to the lower of (i) the average closing price per share of AMD's common stock on the NYSE during the 20 trading days immediately prior to and including December 12, 2008 or (ii) the average closing price per share of AMD's common stock on the NYSE during the 20 trading days immediately prior to the closing date of the transaction."
AMD will also issue to Mubadala an additional 5 million warrants to purchase AMD stock, for a total of 35 million warrants.
"All other material economic terms of the transaction agreements remain unchanged. ATIC will still invest $2.1 billion to purchase its stake in the Foundry Company, of which it will invest $1.4 billion directly in the new entity and will pay $700 million to AMD," the chipmaker said in a statement.