AMD announced Tuesday that it was heading to the debt market to raise $300 million in senior notes.
A senior note is debt issued by a business that is of the highest seniority on the issuer’s balance sheets. It is secured by collateral, and should the issuer go bankrupt this debt must be repaid. It often will fetch a higher interest rate than regular issued debt.
According to a release from the company, some of the capital raised will go to paying off existing convertible notes that are due at the end of the month, and in 2015. The company also disclosed that some of the funds raised will be used towards payments due to GlobalFoundries, under a revised chip production agreement AMD made with the chip foundry in March.
More interestingly, the release says that AMD may use the raised capital for another strategic acquisition. In what was largely a coup-de-data-centre against Intel, AMD purchased microserver startup SeaMicro for $334 million in February. Given that AMD now has a taste for acquisitions, it’s possible that AMD could look long and hard at acquiring ARM chip builder Calxeda or perhaps Advanced Micro Circuits — a company that specializes in making chips based on ARM’s 64bit V8.
The problem with making any kind of serious acquisition is that it won’t come cheap. AMD is sitting with $485m short-term debt and $1.51bn in long-term debt; $1bn in cash and $564m in securities.