In case anyone is interested, here are some details on the Dresden loan (from last 10Q).
AMD Saxony, an indirect wholly owned German subsidiary of AMD, has constructed
and is installing equipment in Dresden Fab 30. AMD, the Federal Republic of
Germany, the State of Saxony and a consortium of banks are supporting the
project. We currently estimate construction and facilitization costs of Dresden
Fab 30 to be $2.2 billion. In March 1997, AMD Saxony entered into a loan
agreement and other related agreements (the Dresden Loan Agreements) with a
consortium of banks led by Dresdner Bank AG. The Dresden Loan Agreements
provide for the funding of the construction and facilitization of Dresden Fab
30. The funding consists of:
. equity, subordinated loans and loan guarantees from AMD;
. loans from a consortium of banks; and
. grants, subsidies and loan guarantees from the Federal Republic of Germany
and the State of Saxony.
The Dresden Loan Agreements require that we partially fund Dresden Fab 30
project costs in the form of subordinated loans to, or equity investments in,
AMD Saxony. In accordance with the terms of the Dresden Loan Agreements, we
have invested $430 million to date in the form of subordinated loans to and
equity in AMD Saxony. In addition to support from AMD, the consortium of banks
referred to above has made available $814 million in loans to AMD Saxony to
help fund Dresden Fab 30 project costs. AMD Saxony had $259 million of such
loans outstanding as of April 2, 2000.
Finally, the Federal Republic of Germany and the State of Saxony are supporting
the Dresden Fab 30 project, in accordance with the Dresden Loan Agreements, in
the form of:
. guarantees of 65 percent of AMD Saxony bank debt up to a maximum amount of
$814 million;
. capital investment grants and allowances totaling $287 million; and
. interest subsidies totaling $150 million.
Of these amounts, AMD Saxony had received $284 million in capital investment
grants and allowances and $22 million in interest subsidies as of April 2, 2000.
The grants and subsidies are subject to conditions, including meeting specified
levels of employment in December 2001 and maintaining those levels until June
2007. Noncompliance with the conditions of the grants and subsidies could
result in the forfeiture of all or a portion of the future amounts to be
received as well as the repayment of all or a portion of amounts received to
date. As of April 2, 2000, we were in compliance with all of the conditions of
the grants and subsidies.
The Dresden Loan Agreements also require that we:
. provide interim funding to AMD Saxony if either the remaining capital
investment allowances or the remaining interest subsidies are delayed, such
funding to be repaid to AMD as AMD Saxony receives the grants or subsidies
from the State of Saxony;
. fund shortfalls in government subsidies resulting from any default under the
subsidy agreements caused by AMD Saxony or its affiliates;
. guarantee a portion of AMD Saxony's obligations under the Dresden Loan
Agreements up to a maximum of $107 million until Dresden Fab 30 has been
completed;
. fund certain contingent obligations including obligations to fund project
cost overruns, if any; and
. make funds available to AMD Saxony, after completion of Dresden Fab 30, up to
approximately $72 million if AMD Saxony does not meet its fixed charge
coverage ratio covenant.
Because most of the amounts under the Dresden Loan Agreements are denominated in
deutsche marks, the dollar amounts set forth above are subject to change based
on applicable conversion rates. We used the exchange rate at the end of the
first quarter of 2000, which was approximately 2.03 deutsche marks to 1 U.S.
dollar, to value the amounts denominated in deutsche marks.
The definition of defaults under the Dresden Loan Agreements includes the
failure of AMD, AMD Saxony or AMD Holding, the parent company of AMD Saxony and
a wholly owned subsidiary of AMD, to comply with obligations in connection with
the Dresden Loan Agreements, including:
. material variances from the approved schedule and budget;
. our failure to fund equity contributions or shareholder loans or otherwise
comply with our obligations relating to the Dresden Loan Agreements;
. the sale of shares in AMD Saxony or AMD Holding;
. the failure to pay material obligations;
. the occurrence of a material adverse change or filings or proceedings in
bankruptcy or insolvency with respect to us, AMD Saxony or AMD Holding; and
. the occurrence of default under the indenture dated August 1, 1996 between
AMD and the United States Trust Company of New York (the Indenture) pursuant
to which our $400 million aggregate principal amount of 11% Senior Secured
Notes due 2003 (the Senior Secured Notes) were issued or the Loan Agreement.
Generally, any default with respect to borrowings made or guaranteed by AMD that
results in recourse to us of more than $10 million and is not cured by us, would
result in a cross-default under the Dresden Loan Agreements, the Indenture and
the Loan Agreement. Under certain circumstances, cross-defaults result under
the Convertible Subordinated Notes, the Indenture and the Dresden Loan
Agreements.
In the event we are unable to meet our obligation to make loans to, or equity
investments in, AMD Saxony as required under the Dresden Loan Agreements, AMD
Saxony will be unable to complete Dresden Fab 30 and we will be in default under
the Dresden Loan Agreements, the Indenture and the Loan Agreement, which would permit acceleration of certain
indebtedness, which would have a material adverse effect on us. We cannot assure
that we will be able to obtain the funds necessary to fulfill these obligations.
Any such failure would have a material adverse effect on us.
From 10K
The Dresden Loan Agreements were amended again in June 1999 to remove a
requirement that we sell at least $200 million of our stock by June 30, 1999 in
order to fund a $70 million loan to AMD Saxony. In lieu of the stock offering,
we funded the $70 million loan to AMD Saxony with proceeds from the sale of
Vantis.
-Scot |
