March 12, 2013
Cash-strapped semiconductor maker Advanced Micro Devices (NYSE: AMD ) agreed Tuesday to sell its 7171 Southwest Parkway Austin, Texas, campus to real estate investment company Spear Street Capital for approximately $164 million, net of fees and closing costs. AMD isn't actually moving out of the campus, however, but rather doing a "sale-and-leaseback" transaction in which it monetizes its real estate assets and then pays for the privilege of continuing to occupy them. AMD is entering into a 12-year lease agreement for the premises as part of the transaction.
Closing is slated for March 26, and AMD says it will record the extra cash in its Q1 financial results, due out April 18.
AMD justified the sale by saying that it has a "strategy to reduce investments and capital in non-core parts of the business, including real estate." And in line with this strategy, the company has entered into similar sale-and-leaseback transactions with its Sunnyvale, Calif., headquarters and its Markham, Ontario, facility as well.
That said, the company admitted it will take a $50 million loss on the sale. One factor also pertinent to the raising of cash in this manner -- AMD currently has $1 billion more debt than cash on its books and was free cash flow negative to the tune of $471 million in 2012.