The terms of the debt arent fixed; AMD said it would negotiate with the individual purchasers of the notes to set the interest rate and conversion price of the notes, which, under certain circumstances, are convertible into cash at a price lower than the principal amount. At a higher rate, however, they can be exchanged for AMD stock.
Although AMD has nearly $1.2 billion in cash, it must fund a capacity expansion plan that will cost it $2 billion this year alone, even after the company said it would attempt to trim its budget by an additional $500 million, Reuters reported. An October regulatory filing also lists certain conditions AMD must avoid, including issuing new shares, or else risk being forced to repay the debt immediately.
AMD will use a "capped call," in which "the cap price in each capped call transaction will be approximately three times the closing price of our common stock on the date the capped call transactions are executed," AMD said.