Morgan Stanley plans contingent income notes tied to Freeport-McMoRan

By Toni Weeks

San Diego, April 27 - Morgan Stanley plans to price contingent income autocallable securities due May 24, 2012 linked to the common stock of Freeport-McMoRan Copper & Gold Inc., according to an FWP filing with the Securities and Exchange Commission.

If Freeport-McMoRan stock closes above the downside threshold level - 80% of the initial share price - on a quarterly determination date, investors will receive a contingent payment of $0.35 to $0.40 for each $10.00 note. Otherwise, no contingent payment will be made for that period.

If the closing share price is greater than the initial share price on any of the first three quarterly determination dates, the notes will be automatically redeemed at par plus the contingent payment.

If the notes are not called and the final share price is greater than or equal to the downside threshold level, the payout at maturity will be par plus the contingent payment. If the final share price is less than the downside threshold level, the payout will be a number of Freeport-McMoRan shares equal to the principal amount of notes divided by the initial share price or, at Morgan Stanley's option, the cash value of those shares.

The exact contingent payment will be set at pricing.

The notes (Cusip: 61760E655) will price May 24 and settle May 27.

Morgan Stanley & Co. Inc. is the agent.

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