AMD Shareholders Vote to Allow "The Foundry Company" Spin Off

AMD logoShareholders of Advanced Micro Devices have approved the financial transactions necessary for the formation of "The Foundry Company" at a second special vote in Austin, Texas. This allows AMD to spin off its fabs into a joint venture with the Advanced Technology Investment Company (ATIC), wholly owned by the Emirate of Abu Dhabi.

At the first special meeting on February 10, only 42% of AMD's shares were presented. This shook investor confidence in AMD's ability to close the deal, leading to a sharp drop in AMD's stock price. AMD has been criticized for not allowing enough time for shareholders to prepare and submit their votes.

There were a total of 608,725,020 outstanding shares of AMD stock on January 15, the date of record to denote those shareholders who were eligible to vote. Of that total, only 305,951,749 shares were actually registered to vote by proxy or present at this second special meeting. This means that only 50.26% of outstanding stock was actually presented, barely passing the required majority to form a quorum.

The final results were 289,045,519 shares in favor, 7,269,962 shares against, and 9,636,268 shares abstaining. 94.47% of shares presented voted in favor, but the low turnout means that only 47.48% of all outstanding shares were actually voted in favor of the deal, which is expected to close by March 2, 2009.

The approved transactions include the issue and sale of 58 million shares of AMD's common stock to West Coast Hitech (WCH), a Cayman Island based holding company. It is a wholly owned subsidiary of Mubadala Development, a sovereign wealth fund owned by the government of Abu Dhabi. WCH currently owns 8.05% of AMD due to an earlier investment. Due to rules set out by the Securities and Exchange Commission, this meant that the acquisition of the additional shares required a special vote by shareholders, which have now allowed WCH to own 16.05% of AMD when the deal closes.

A separate but related agreement sells WCH warrants to purchase an additional 35 million shares. If exercised, WCH will own 142 million shares, accounting for 19.9% of AMD on a fully diluted basis, including outstanding stock options and restricted stock units.

A point of contention was raised by an angry shareholder at the meeting, who pointed out that AMD's board of directors approved a $3,000,000 transaction bonus to Hector Ruiz, AMD's Executive Chairman.

Ruiz, who has been heavily criticized for his poor management of AMD after the departure of the legendary Jerry Sanders, will become the Chairman of The Foundry Company. His base salary will be $1,150,000 per year, but he will also be eligible for a targeted annual bonus opportunity of 200% of his base salary, with a maximum annual bonus opportunity at 400% of his base salary.

The Foundry Company will assume ownership of all AMD's fabs, in an effort to lower AMD's debt burden. The new firm will seek to compete against other foundries such as UMC (United Microelectronics Corporation), Chartered Semiconductor, and TSMC (Taiwan Semiconductor Manufacturing Company), which currently produces AMD's graphics chips.

AMD will contribute its fabs, manufacturing employees, intellectual property rights, and other related assets to the new joint venture, which will then assume $1.2 billion in debt from AMD. ATIC will invest $2.1 billion to purchase its ownership stake in The Foundry Company, of which $700 million will go directly to AMD. The other $1.4 billion will provide capital funding.

AMD and ATIC will each own 50% of the voting shares, entitling each to elect four directors of The Foundry Company. AMD will own 34.2%, with the remaining 65.8% owned by ATIC, which may see its ownership increase over time based on future capital infusions of up to $6 billion.

Source: DailyTech

Tags: AMD

Add comment

Your name:
Sign in with:
Your comment:

Enter code:

E-mail (not required)
E-mail will not be disclosed to the third party

Last news

Pokemon GO had the potential to net $1 billion a year
The report said that Hon Hai has invested about US$600 million in India
Market research firm IDC reports that in the third quarter of this year
Customers will only have to shell out 50% of the cost of their Galaxy S7 device
New flagship will launch in 2017
Patent hints at name of the upcoming Surface AIO
IBM, Globalfoundries and Samsung have chosen to use extreme ultraviolet (EUV) light to pattern transistors
Samsung Galaxy TabPro S - a tablet with the Windows-keyboard
The first Windows-tablet with the 12-inch display Super AMOLED
June 7, 2016 /
Keyboards for iOS
Ten iOS keyboards review
July 18, 2015 /
Samsung E1200 Mobile Phone Review
A cheap phone with a good screen
March 8, 2015 / 4
Creative Sound Blaster Z sound card review
Good sound for those who are not satisfied with the onboard solution
September 25, 2014 / 2
Samsung Galaxy Gear: Smartwatch at High Price
The first smartwatch from Samsung - almost a smartphone with a small body
December 19, 2013 /
HP Slate 7 is a 7-inch Android 4 Tablet PC with good sound
A cost-effective, 7-inch tablet PC from a renowned manufacturer
October 25, 2013 / 4

News Archive



Do you use microSD card with your phone?
or leave your own version in comments