Recently, AMD issued a press release announcing its intent to commence concurrent public offerings of approximately $600 million of its common stock and $700 million of 2.125% convertible senior notes due 2026. The company said that, with the capital raised from this offering, it intends to retire existing debt and invest the net proceeds after repayment in capital expenditure and net working capital. Although this move should result in a significantly lower interest burden for AMD, its stock price has plunged by approximately 24% since it made this announcement last week. This is because investors have factored into AMD’s valuation the impact of equity dilution from the issuance of the common stock and the potential dilution that can arise due to conversion of its debt at $8. Taking into account the drop in stock price, the company has decided the price of the public offering of $600 million common stock at $6.00 per share. Below we investigate the effect of the public offering of common stock and convertible debt by AMD in more detail:

from Forbes – Tech http://ift.tt/2cxQUXA
via IFTTT