ABB to repurchase 5 1/8% and 5 3/8% euro bonds

New York, July 29 - ABB Ltd. (Ba2/BB-) said that it was beginning tender offers to repurchase all €300 million of the outstanding 5 3/8% bonds due 2005 and all €475 million of the outstanding 5 1/8% bonds due 2006. The bonds were issued by its ABB International Finance Ltd. unit.

The tender offer is scheduled to expire on Aug. 20, subject to possible extension. Settlement is expected to be on or around Aug. 30. The exact date is dependent on the outcome of special bondholders' meetings scheduled for Aug. 25, but it is not anticipated that the settlement date will be later than Sept. 14.

ABB, a Zurich, Switzerland-based power and automation technology group, said that the tender price of the bonds will be calculated based on a fixed spread of 0.15% over the relevant benchmark interest rate (Euribor in relation to the 2005 bonds and mid-swaps in relation to the 2006 bonds). The exact purchase price will be calculated on the pricing date, based on the then-current market benchmark interest rates.

The company said the transaction will reduce its total debt outstanding, in line with its plan to further strengthen its financial position and achieve an investment-grade rating. The company aims to cut its gross debt level to $4 billion by the end of 2005.

So far in 2004, ABB has made open market repurchases of €25.314 million of the 5 3/8% bonds and €107.175 million of the 5 1/8% bonds. Bonds repurchased have not been cancelled and have therefore been included in the respective principal amount outstanding.

In conjunction with the tender offers, ABB has scheduled the bondholders' meetings on Aug. 25, at which holders will vote on extraordinary resolutions. If passed, each resolution will allow ABB to redeem those bonds that have not been tendered under the relevant tender offer.

The meetings will be held at the offices of Freshfields Bruckhaus Deringer, 65 Fleet St., London EC4Y 1HS on Aug. 25, at 10 a.m. local time for the 5 3/8% bond and at 11 a.m. local time for the 5 1/8% bond.

Holders who have already tendered their bonds by then will be deemed to have consented to the respective extraordinary resolution and are required to take no further action and do not have to attend the meeting. Holders who have not tendered their bonds may vote at the bondholder meetings either in favor or against the resolutions.

Should the resolution be passed and should ABB exercise its right to redeem early the bonds that were not tendered, these bonds would be redeemed on identical terms to tendered bonds.

Mandated dealer managers for the transaction are Barclays Capital (call 011 +44 20 7773 8990), Commerzbank Securities (call 011 +44 20 7469 3338) and Dresdner Kleinwort Wasserstein (call 011+44 20 7475 4974). Additional information on the tender offer and the bondholders' meetings can be obtained on the internet via http://www.abbbondtender.com.

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