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IBM launches exchange for 7.125% debentures, 7% notes and 8% notes
By Jennifer Chiou
New York, Nov. 6 - International Business Machines Corp. announced the start of an offer to exchange any and all of its $850 million of 7.125% debentures due Dec. 1, 2096, $150 million of 7% debentures due Oct. 30, 2045 and $1 billion of 8% notes due Oct. 15, 2038.
In exchange, the company will issue a new series of 5.6% senior notes due 2039 and cash.
IBM said it is offering an early exchange premium to holders who validly tender their old notes before 5 p.m. ET on Nov. 20.
The offer will conclude at midnight ET on Dec. 7, with settlement on Dec. 10.
IBM said it is conducting the exchanges to retire high coupon long-dated debt in a favorable interest rate environment.
The new notes will mature on Nov. 30, 2039.
For each $1,000 principal amount of 7.125% debentures, IBM will issue an equal amount of the new notes and a cash amount of $259.01, including an early premium of $30.00 principal amount of new notes.
For each $1,000 principal amount of 7% notes, IBM will issue an equal amount of the new notes and a cash amount of $224.62, including an early premium of $20.00 principal amount of new notes.
For each $1,000 principal amount of 8% notes, IBM will issue $1,100 of the new notes and a cash amount of $268.74, including an early premium of $30.00 principal amount of new notes.
The company will also pay accrued interest.
IBM said it expects the early settlement date to be Nov. 30.
The exchange offer is subject to the satisfaction or waiver of certain conditions, including IBM's ability to issue at least $500 million of new notes in exchange for all old notes tendered and accepted.
Global Bondholders Service Corp. is the exchange and information agent (212 430-6688). Credit Suisse Securities (USA) LLC, Deutsche Bank Securities Inc. and J.P. Morgan Securities Inc. are the financial advisers for the exchange offer.
IBM, based in Armonk, N.Y., develops computer systems, software, storage systems and microelectronics.
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