IBM to issue $1.52 billion of new notes in completed exchange offers

By Angela McDaniels

Tacoma, Wash., Dec. 8 - International Business Machines Corp. received tenders for $1,436,073,000 of notes during exchange offers that ended at midnight ET on Dec. 7, according to a company news release.

Specifically, holders tendered $500,028,000 of the company's $850 million of 7.125% debentures due Dec. 1, 2096, $123,045,000 of its $150 million of 7% debentures due Oct. 30, 2045 and $813 million of its $1 billion of 8% notes due Oct. 15, 2038.

The notes that were tendered by the early exchange date, 5 p.m. ET on Nov. 20, were settled on Nov. 30. Notes that were tendered after that time but prior to the expiration date will be settled on Dec. 10.

The company offered new 5.6% senior notes due Nov. 30, 2039 and cash.

For each $1,000 principal amount of 7.125% debentures, the exchange amount is an equal amount of the new notes and $259.01 in cash. The exchange amount includes an early premium of $30.00 principal amount of new notes for each note tendered by the early exchange date.

For each $1,000 principal amount of 7% debentures, the exchange amount is an equal amount of the new notes, including an early premium of $20.00 principal amount of new notes, and $224.62 in cash.

For each $1,000 principal amount of 8% notes, the exchange amount is $1,100 of the new notes, including an early premium of $30.00 principal amount of new notes, and $268.74 in cash.

The company is also paying accrued interest.

Approximately $1,515,000,000 of the new notes were issued on Nov. 30, and the company expects to issue an additional $2 million on Dec. 10.

IBM said it conducted the exchange offers to retire high-coupon, long-dated debt in a favorable interest rate environment.

The exchange offers began on Nov. 6. and were 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 Bondholder Services Corp. (212 430-6688) was the exchange and information agent. Credit Suisse Securities (USA) LLC, Deutsche Bank Securities Inc. and J.P. Morgan Securities Inc. were the financial advisers for the exchange offers.

IBM, based in Armonk, N.Y., develops computer systems, software, storage systems and microelectronics.

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