AMD, Mubadala and ATIC renegotiate

AMD, ATIC AND MUBADLA are modifying their agreement to essentially lower the price. There are four changes, but in the end, AMD the elder gets the same cash.

The first thing is a repricing of the stock in AMD that Mubadala will be buying. They are going to buy 58 million shares at the average closing price of the stock for the 20 days prior to December 12, or the average 20 days before the deal is finalised next year, whichever is lower. This would likely be because the initial deal was struck while AMD shares were in the mid-4's, while now they are at 2.

The other thing AMD is doing is issuing 5 million warrants for Mubadala to purchase, giving them a total of 35 million. That's it for the changes to the Mubadala side.

ATIC and AMD have a few more changes as well. For the non-financial types out there, the net asset valuation multiple on future capital calls of "The Foundry Company" will be reduced from 1.1x to 0.9x. If you are not a financial analyst, it basically means very little to you, but AMD's Fab assets are essentially worth less money now, so ATIC is getting more for its money.

The two are also writing down the value of assets that AMD prime is contributing to the deal. The multiplier goes from 1.13x to 0.85x, quite a drop. Again, it is likely for the same reasons, the deal was struck when fabs were worth more, and it is being renegotiated for current pricing.

The result of all of this is that ATIC will own about 10% more of Fabco. It is now split at 34.2% AMD the one you know vs 65.8% ATIC. Voting will still remain the same, which is likely the key to AMD's contract with Intel. AMD will still get the same amount of cash in the end, but they just have to give up a lot more for it. µ