AMD 2005 Annual Report Download - page 105

Table of Contents
The indenture governing the 7.75% Notes contains certain covenants that limit, among other things, the Company’s ability and the ability of the
Company’s restricted subsidiaries, which include all of the Company’s subsidiaries, from:
• incurring additional indebtedness;
• paying dividends and making other restricted payments;
• making certain investments, including investments in the Company’s unrestricted subsidiaries;
• creating or permitting certain liens;
• creating or permitting restrictions on the ability of the restricted subsidiaries to pay dividends or make other distributions to the Company;
• using the proceeds from sales of assets;
• Entering into certain types of transactions with affiliates; and
• consolidating, merging or selling the Company’s assets as an entirety or substantially as an entirety.
Issuance costs incurred in connection with this transaction in the amount of approximately $13 million is being amortized ratably over the term of the
7.75% Notes as interest expense, approximating the effective interest method. (See Note 18.)
Fab 36 Term Loan and Guarantee and Fab 36 Partnership Agreements
The Company’s new 300-millimeter wafer fabrication facility, Fab 36, is located in Dresden, Germany adjacent to the Company’s other wafer
manufacturing facility, Fab 30. Fab 36 is owned by a German limited partnership named AMD Fab 36 Limited Liability Company & Co. KG, or AMD Fab 36
KG. The Company controls the management of AMD Fab 36 KG through a wholly owned Delaware subsidiary, AMD Fab 36 LLC, which is a general partner of
AMD Fab 36 KG. AMD Fab 36 KG is the Company’s indirect consolidated subsidiary. Fab 36 will produce advanced microprocessor products, and the
Company expects first production shipments of products manufactured using 300-millimeter wafers in the first quarter of 2006.
To date, the Company has provided the majority of financing for the Fab 36 project. In addition, Leipziger Messe GmbH, a nominee of the State of
Saxony, Fab 36 Beteiligungs GmbH, an investment consortium arranged by M+W Zander Facility Engineering GmbH, the general contractor for the project, and
a consortium of banks are providing financing for the project. Leipziger Messe and Fab 36 Beteiligungs are limited partners in AMD Fab 36 KG. The Company
also anticipates receiving up to approximately $644 million in grants and allowances from federal and state German authorities for the Fab 36 project.
The funding to construct and facilitize Fab 36 consists of:
• equity contributions from the Company of $694 million under the partnership agreements, revolving loans from the Company of up to approximately
$890 million, a guarantee from the Company for amounts owed by AMD Fab 36 KG and its affiliates to the lenders and unaffiliated partners;
• investments of up to approximately $380 million from Leipziger Messe and Fab 36 Beteiligungs;
• loans of up to approximately $831 million from a consortium of banks;
• up to approximately $644 million of subsidies consisting of grants and allowances, from the Federal Republic of Germany and the State of Saxony;
depending on the level of capital investments by AMD Fab 36 KG, of which $198 million of cash has been received as of December 25, 2005; and
• a loan guarantee from the Federal Republic of Germany and the State of Saxony of 80 percent of the losses sustained by the lenders referenced above
after foreclosure on all other security.
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Source: ADVANCED MICRO DEVIC, 10-K, February 27, 2006