AMD Loses More Stake In New Abu Dhabi Microprocessor Venture

By: Mary Couchman
Staff Writer
Published: Dec 8, 2008

The AMD venture in Foundry Company has been renegotiated. AMD will now own 34 percent of the new venture instead of 44 percent. The new Foundry Co will be worth less under the renegotiated terms with investor Advanced Technology Investment Co.

Advanced Micro Devices Inc on Monday announced it will own less of its chip factories than previously negotiated. AMD is currently in a joint venture with investment firm Mubadala of the Persian Gulf state Abu Dhabi.

AMD has renegotiated terms to own 34 percent of the new venture instead of 44 percent. The new Foundry Co will be worth less under the new terms with investor Advanced Technology Investment Co.

AMD's manufacturing assets are contributing to the new Foundry Company which will be worth less under the renegotiated terms with investor Advanced Technology Investment Company.

Advanced Technology Investment Company is still paying $2.1 billion to buy its stake in Foundry Company. It will have equal voting rights as AMD.

As confusing as it sounds, the terms allow Abu Dhabi fund Mubadala to invest directly in AMD by purchasing 58 million AMD common shares at a lower price. The original agreement priced the stock at $5.41. AMD shares are trading Monday afternoon at $2.10.

The original deal between AMD and Mubadala was made last October 6. However, AMD spokesman Drew Prairie said it was amended due to the current economic crises. AMD could lose more in the new venture. Mubadala has warrants to buy 35 million AMD shares, up from 30 million as previously agreed upon.

Mubadala will pay AMD's average stock price during the month of December. The company will make the purchase before December 12, 2008.