Placement part of Microsoft's purchase of devices, services business
By Angela McDaniels
Tacoma, Wash., Sept. 6 - Nokia Corp. will issue 1.5 billion of convertible bonds to Microsoft Corp., according to a company news release.
The convertibles will be issued in three tranches as follows:
The first tranche will mature in 2018 and have a 1.125% coupon, and the initial conversion price will be 3.9338;
The second tranche will mature in 2019 and have a 2.5% coupon, and the initial conversion price will be 4.0851; and
The third tranche will mature in 2020 and have a 3.625% coupon, and the initial conversion price will be 4.2364.
The conversion prices are 6.3% lower, 2.7% lower and 0.9% higher, respectively, than the company's 4.20 closing share price on Thursday.
The convertibles will be issued at par.
The settlement date is expected to be Sept. 23.
Part of devices sale
Nokia is selling substantially all of its devices and services business to Microsoft. As part of that transaction, Microsoft had agreed to make 1.5 billion available to Nokia in the form of the convertibles.
Nokia said it decided to draw down the financing and use the proceeds for general corporate purposes and to prepay the financing it used to acquire the 50% stake in Nokia Siemens Networks BV that it did not already own. That acquisition was completed in August.
Once the sale of the devices and services business is completed, the convertibles will be redeemed at par. Microsoft has agreed not to sell or convert any of the convertibles prior to the closing of sale.
If the sale is not completed, the convertibles will remain outstanding and Microsoft will have the right to sell the 2018 convertibles immediately. Microsoft agreed not to sell any of the 2019 convertibles prior to the second anniversary of their issuance date and any of the 2020 convertibles prior to the third anniversary of their issuance date.
Microsoft also agreed not to convert any of the 2018 convertibles or 2019 convertibles prior to the second anniversary of their issuance date and the 2020 convertibles prior to the third anniversary of their issuance date, except in a change-of-control situation.
In total, the bonds are convertible into 367.5 million, or 8.9%, of Nokia's shares.
If the convertibles are converted by Microsoft, Microsoft has agreed to vote according to the recommendations of Nokia's board of directors.
More bond terms
Nokia can redeem the 2018 convertibles and 2019 convertibles after three years and 30 days if its volume-weighted average share price is at least 130% of the conversion price for a specified period of time. The 2020 convertibles are similarly callable after four year and 30 days.
There is also a clean-up call option for each tranche if 15% or less of that tranche remains outstanding.
The convertibles provide for adjustments to the conversion price for any dividends in cash or in kind as well as customary anti-dilution adjustments.
Nokia said it applied to list the convertibles on the Open Market (Freiverkehr) segment of the Frankfurt Stock Exchange.
Espoo, Finland-based Nokia is a wireless telecommunications equipment maker.
| Issuer: | Nokia Corp.
|
| Issue: | Convertible bonds
|
| Amount: | 1.5 billion
|
| Price: | Par
|
| Warrants: | No
|
| Investor: | Microsoft Corp.
|
| Pricing date: | Sept. 6
|
| Settlement date: | Sept. 23
|
| Stock symbol: | Nasdaq OMX: NOK1V
|
| Stock price: | 4.20 at close Sept. 5
|
| Market capitalization: | 15.43 billion
|
|
|
| Five-year bonds
|
| Amount: | 500 million
|
| Maturity: | 2018
|
| Coupon: | 1.125%
|
| Conversion price: | 3.9338
|
| Call option: | Subject to 130% hurdle after three years and 30 days
|
|
|
| Six-year bonds
|
| Amount: | 500 million
|
| Maturity: | 2019
|
| Coupon: | 2.5%
|
| Conversion price: | 4.0851
|
| Call option: | Subject to 130% hurdle after three years and 30 days
|
|
|
| Seven-year bonds
|
| Amount: | 500 million
|
| Maturity: | 2020
|
| Coupon: | 3.625%
|
| Conversion price: | 4.2364
|
| Call option: | Subject to 130% hurdle after four years and 30 days
|
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