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IBM begins exchange offers for 7.125% debentures, 8% notes, 5.6% notes
By Angela McDaniels
Tacoma, Wash., May 21 - International Business Machines Corp. began exchange offers for any and all of its $322,088,000 of 7.125% debentures due 2096, any and all of its $186.67 million of 8% notes due 2038 and up to $800 million principal amount of its $1,545,095,000 of 5.6% notes due 2039, according to a company news release.
The company is offering new 4% notes due June 20, 2042 and, in some cases, cash in exchange for the existing notes.
For each $1,000 principal amount of 7.125% debentures exchanged, holders will receive $1,369.69 principal amount of new notes and $200 of cash.
For each $1,000 principal amount of 8% notes exchanged, holders will receive $1,694.80 principal amount of new notes. This includes an early exchange premium, $40.00 principal amount of new notes, for each note tendered by the early exchange date, which is 5 p.m. ET on June 4.
For each $1,000 principal amount of 5.6% notes exchanged, holders will receive $1,155.07 principal amount of new notes and $150 of cash. This includes an early exchange premium, $40.00 principal amount of new notes, for each note tendered by the early exchange date.
The company will also pay accrued interest in cash up to but excluding the settlement date, which is expected to be June 20.
The exchange offers will expire at midnight ET on June 18.
The exchange offers are subject to the company's ability to issue at least $500 million principal amount of new notes in exchange for all of the old notes tendered.
IBM said it is conducting the exchange offers to retire high-coupon long-dated debt in a favorable interest-rate environment.
Credit Suisse Securities (USA) LLC, Citigroup Global Markets Inc., Goldman Sachs & Co. and Deutsche Bank Securities Inc. are the dealer managers, according to a market source.
The exchange and information agent is Global Bondholder Services Corp. (212 430-3774 for bankers and brokers, others call 866 389-1500).
IBM is a technology products and services provider based in Armonk, N.Y.
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