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AMD Selling, Leasing Back Austin Campus to Raise Cash

AMD said on Tuesday that it has entered an agreement to sell and then lease back its "Lone Star Campus" in Austin, Texas to Southwest Parkway Holdings, an affiliate of real estate investment company Spear Street Capital. The transaction is expected to close around March 26, and will generate approximately $164 million in cash for the struggling chip maker.

According to the deal, AMD will enter into a 12-year lease with an extension option to continue its operations on the campus. Meanwhile, money generated from the sale is expected to be reflected in the company’s first quarter 2013 financial statements when reported on April 18. There will also be a special $50 million charge primarily related to the difference between the sale proceeds and the property's carrying value.

This isn't the first time AMD has pulled the sell-and-lease-back scheme, as the company sold its Sunnyvale, California headquarters in 1998 and is currently leasing it back. It also pulled the sell-and-lease-back maneuver with the major site in Markham, Ontario, Canada in 2008. Needless to say, this isn't anything new for the APU maker.

"As we reset and restructure AMD for long-term success, we are taking a number of steps designed to optimize our business and monetize assets," said Devinder Kumar, chief financial officer of AMD. "The sale of our Austin campus will unlock a significant amount of capital, while the multi-year lease back of our Austin campus reconfirms our long-term commitment to the city that so many AMD employees have called home since 1979."

AMD said the sale of its Austin campus is part of the company’s strategy to reduce investments and capital in non-core parts of the business, including real estate. Currently AMD employs approximately 1,900 people in the Austin campus.

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