(WEB HOST INDUSTRY REVIEW) — Chip manufacturer Intel (www.intel.com) has announced it plans to sell $1.5 billion in debt, where it will use the money to buy back shares.
In a statement Monday, the company said the bonds would be convertible into shares and will mature in 2039. Intel will allocate the majority of the funds to buying stock repurchases, with the remainder going toward “general corporate purposes”.
Intel is raising funds to benefit as much as possible from the prime market conditions, just as it did when it last sold debt in 2005.
As of last month, the company has had more than $10 billion in cash and short-term investments, with $1.6 billion of convertible bonds maturing in 2035.
With the recession bringing on lower borrowing rates, many companies have taken advantage of this time to sell debt, including Microsoft.
The move seems to have had a positive effect on Intel, with the company’s shares jumping 11 cents to $18.90 today on the Nasdaq.
The company has given the first buyers of the debt the option to buy an additional $250 million, in the event that Intel sells more bonds than it actually has.
Meanwhile, the company announced this week it will cut 294 jobs at its Irish manufacturing facility in Leixlip, Co Kildare, which produces Intel’s older 200mm products.
Earlier this year, the company announced it would close six manufacturing plants in the US, China, Malaysia and the Philippines, but spared Ireland, requesting for 300 voluntary layoffs.
The company says it is now implement mandatory layoffs, offering affected employees the same severance packages as it did for the voluntary layoffs earlier this year.
Intel’s management will work with affected employees to “provide support and assistance.”
