By Rebecca Melvin
New York, June 9 - Microsoft Corp. priced $1.15 billion of three-year convertible senior notes after the close of markets Tuesday at par to yield 0% with an initial conversion premium of 33%, according to a news release.
Pricing came at the talked point for the coupon and near the midpoint, but toward the rich end, of talk for the premium, which was 30% to 35%.
The Rule 144A offering has a greenshoe of $100 million.
Citigroup Global Markets Inc. and Bank of America Merrill Lynch were the joint bookrunners, with co-managers Barclays Capital Inc. and UBS Securities LLC.
The bonds are non-callable for life with no puts. There is net share settlement, which will be par cash settled, with the residual in cash or stock at Microsoft's option prior to March 15, 2013.
In connection with pricing of the notes, Microsoft entered into capped call transactions with option counterparties who were initial purchasers of the bonds.
The capped call transactions are aimed at reducing potential dilution upon conversion of the notes and push the effective conversion premium from the issuer's perspective to about 48%.
Proceeds will be used to repay commercial paper, to pay for the call spread and to buy back common shares associated with the call spread transactions.
Microsoft is a Redmond, Wash.-based maker of computer software and hardware.
| Issuer: | Microsoft Corp.
|
| Issue: | Convertible senior notes
|
| Amount: | $1.15 billion
|
| Greenshoe: | $100 million
|
| Maturity: | June 2013
|
| Bookrunners: | Citigroup Global Markets Inc., Bank of America Merrill Lynch
|
| Co-managers: | Barclays Capital Inc. and UBS Securities LLC
|
| Coupon: | 0%
|
| Price: | Par, $1,000
|
| Yield: | 0%
|
| Conversion premium: | 33%
|
| Conversion price: | $34.40
|
| Conversion ratio: | 29.9434 shares
|
| Call protection: | Non-callable
|
| Puts: | No puts
|
| Price talk: | 0%, up 30%-35%
|
| Pricing date: | June 8
|
| Settlement date: | June 14
|
| Distribution: | Rule 144A
|
| Stock listing: | Nasdaq: MSFT
|
| Stock reference price: | $25.11
|
| Market capitalization: | $220.1 billion
|
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