AMD 2008 Annual Report Download - page 137

2004 (Fab 36 Term Loan) and other related agreements (collectively, the Fab 36 Loan Agreements) to finance
the purchase of equipment and tools required to operate Fab 36. The consortium of banks agreed to make
available up to $893 million in loans to AMD Fab 36 KG upon its achievement of specified milestones, including
attainment of “technical completion” at Fab 36, which required certification by the banks’ technical advisor that
AMD Fab 36 KG had a wafer fabrication process suitable for high-volume production of advanced
microprocessors, had achieved specified levels of average wafer starts per week and average wafer yields, and
had completed capital expenditures of approximately $1.4 billion.
Effective as of October 10, 2006, the Company amended the terms of the Fab 36 Term Loan to, among
other things, permit to the Company to borrow in US dollars, subject to certain conditions. In October 2006,
AMD Fab 36 KG borrowed $645 million under the Fab 36 Term Loan (the First Installment). In December 2006,
AMD Fab 36 KG borrowed $248 million under the Fab 36 Term Loan (the Second Installment). As of
December 27, 2008, AMD Fab 36 KG had borrowed the full amount available under the Fab 36 Term Loan and
the total amount outstanding under the Fab 36 Term Loan was $705 million. AMD Fab 36 KG may select an
interest period of one, two, or three months or any other period agreed between AMD Fab 36 KG and the lenders.
The rate of interest on each installment for the interest period selected is the percentage rate per annum which is
the aggregate of the applicable margin, plus LIBOR plus minimum reserve cost if any. As of December 27, 2008,
the rate of interest for the initial interest period was 6.51 percent for the First Installment and 5.63688 percent for
the Second Installment. This loan is repayable in quarterly installments, which commenced in September 2007
and terminate in March 2011. An aggregate of $188 million has been repaid as of December 27, 2008.
The amended and restated Fab 36 Term Loan also sets forth certain covenants applicable to AMD Fab 36
KG. For example, for as long as group consolidated cash is at least $1 billion, the Company’s credit rating is at
least B3 by Moody’s and B- by Standard & Poor’s, and no event of default has occurred, the only financial
covenant that AMD Fab 36 KG is required to comply with is a loan to fixed asset value covenant. Specifically,
the loan to fixed asset value (as defined in the agreement) as at the end of any relevant period specified in
Column A below cannot exceed the percentage set out opposite such relevant period in Column B below:
Column A Column B
(Relevant Period) (Maximum Percentage of Loan
to Fixed Asset Value)
up to and including 31 December 2008 ................... 50percent
up to and including 31 December 2009 ................... 45percent
thereafter ........................................... 40percent
As of December 27, 2008, AMD Fab 36 KG was in compliance with this covenant.
If group consolidated cash is less than $1 billion or the Company’s credit rating is below B3 by Moody’s
and B- by Standard & Poor’s, AMD Fab 36 KG will also be required to maintain minimum cash balances equal
to the lesser of 100 million euros and 50 percent of the total outstanding amount under the Fab 36 Term Loan.
AMD Fab 36 KG may elect to maintain the minimum cash balance in an equivalent amount of U.S. dollars if
group consolidated cash is at least $500 million. If on any scheduled repayment date, the Company’s credit rating
is Caa2 or lower by Moody’s or CCC or lower by Standard & Poor’s, AMD Fab 36 must increase the minimum
cash balances by 5 percent of the total outstanding amount, and at each subsequent request of Dresdner Bank, by
a further 5 percent of the total outstanding amount until such time as either the credit rating increases to at least
Ba3 by Moody’s and BB- by Standard & Poor’s or the minimum cash balances are equal to the total outstanding
amounts. The Company’s rating was B3 with Moody’s and B with Standard and Poor’s as of December 27, 2008.
AMD Fab 36 KG pledged substantially all of its current and future assets as security under the Fab 36 Loan
Agreements, the Company pledged its equity interest in AMD Fab 36 Holding and AMD Fab 36 LLC, AMD Fab
36 Holding pledged its equity interest in AMD Fab 36 Admin and its partnership interest in AMD Fab 36 KG
and AMD Fab 36 Admin and AMD Fab 36 LLC pledged all of their partnership interests in AMD Fab 36 KG.
The Company guaranteed the obligations of AMD Fab 36 KG to the lenders under the Fab 36 Loan Agreements.
The Company also guaranteed repayment of grants and allowances by AMD Fab 36 KG, should such repayment
be required pursuant to the terms of the subsidies provided by the federal and state German authorities.
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