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Technology Stocks : Advanced Micro Devices - Moderated (AMD) -- Ignore unavailable to you. Want to Upgrade?


To: Dinesh who wrote (185592)1/28/2006 3:58:04 PM
From: dougSF30Respond to of 275872
 
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To: Dinesh who wrote (185592)1/28/2006 8:45:52 PM
From: rupert1Respond to of 275872
 
Reasons for paying off debt despite the questionable economics?

Rivet has always indicated that he would like investment grade status. It will allow lower interest rates on operating and capital expenditure loans.

I assume he would like it now, or as soon as possible, in order to put on the best possible face for the financing of Fab 38. I guess that should be in place within the next 4-6 months even though the major expenditures will be much later.

I assume that he will come back to the market for another $1 billion to $1.75 billion if the share price continues to be strong, and look for government grants and low-interest loans to make up the difference.



To: Dinesh who wrote (185592)1/29/2006 3:47:57 AM
From: Joe NYCRead Replies (1) | Respond to of 275872
 
Dinesh,

IMHO a company would try to clean up its balance sheet this way if (a) it's expecting interest costs to beat rate of return on invested capital, or (b) it needs a prettier balance sheet for some other reason.

My guess is (b), since there may be need for additional borrowing in the future (for a new fab) and it will be better if AMD can be "investment grage" at that time.

Joe