AMD has announced that it will be offering $1.5 billion (£740 million) in convertible senior notes as it looks to pay in full the outstanding balance of the term loan AMD entered into with Morgan Stanley Senior Funding in October 2006.
AMD expects to grant to the initial purchaser a 30-day option to purchase up to $225 million aggregate principal amount of additional notes to cover over allotments. If the initial purchaser exercises its over-allotment option, AMD expects to use the additional net proceeds for general corporate purposes, including working capital and capital expenditures.
It could be viewed as significant that AMD has issued senior notes due to their very nature. The notes, a form of bond that is only available to qualified institutional buyers due to regulations governing the transactions due to their nature.
The significance of them is that should the company issuing them go bankrupt, the purchasers, as senior creditors, have to, by law, be paid back first before anyone else, including those who the debt was originally incurred from. The other inference is that AMD believe there is enough risk of them going bankrupt to issue senior notes.