AMD 2008 Annual Report Download - page 88

Fab 36 Term Loan and Guarantee and Fab 36 Partnership Agreements
Our 300-millimeter wafer fabrication facility, Fab 36, is located in Dresden, Germany at our wafer
fabrication site. Fab 36 is owned by AMD Fab 36 Limited Liability Company & Co. KG (or AMD Fab 36 KG), a
German limited partnership. We control 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 our indirect
consolidated subsidiary.
To date, we have provided a significant portion of the financing for Fab 36. In addition to our financing,
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 have provided financing for the project. Leipziger Messe is the remaining limited partner in
AMD Fab 36 KG. We have also received grants and allowances from federal and state German authorities for the
Fab 36 project.
The funding to construct and facilitize Fab 36 included:
• equity contributions from us of $713 million under the partnership agreements, revolving loans from us
of up to approximately $1.1 billion, and guarantees from us for amounts owed by AMD Fab 36 KG and
its affiliates to the lenders and unaffiliated partners;
• investments of approximately $450 million from Leipziger Messe and Fab 36 Beteiligungs;
• a loan of approximately 700 million euro from a consortium of banks, which was fully drawn as of
December 2006;
• up to approximately $764 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 $627 million of cash has been received as of December 27, 2008;
• up to approximately $32 million allowances, from the Federal Republic of Germany and the State of
Saxony, depending on the level of capital investments in connection with expansion of production
capacity in Fab 36, of which $9 million has been received as of December 27, 2008; 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.
We have contributed to AMD Fab 36 KG the full amount of equity required under the partnership
agreements and no loans from us were outstanding. These equity amounts have been eliminated in our
consolidated financial statements.
On April 21, 2004, AMD Fab 36 KG entered into a 700 million euro Term Loan Facility Agreement among
AMD Fab 36 KG, as borrower, and a consortium of banks led by Dresdner Bank AG, as lenders, dated April 21,
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, we amended the terms of the Fab 36 Term Loan to, among other things,
permit us 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
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