REDMOND, Wash., Feb. 16, 2021 /PRNewswire/ -- Microsoft Corp.
(NASDAQ: MSFT) ("Microsoft") today announced the commencement of
offers to (i) exchange (the "Pool 1 Offer") the fourteen series of
notes described in the table below (collectively, the "Pool 1
Notes") for a new series of Microsoft's notes due March 17, 2052 (the "New 2052 Notes") and a cash
payment, as applicable, and (ii) exchange (the "Pool 2 Offer" and,
together with the Pool 1 Offer, the "Exchange Offers") the four
series of notes described in the table below (collectively, the
"Pool 2 Notes" and, together with the Pool 1 Notes, the "Existing
Notes") for a new series of Microsoft's notes due March 17, 2062 (the "New 2062 Notes" and,
together with the New 2052 Notes, the "New Notes") and a cash
payment, as applicable.
A Registration Statement on Form S-4, including a prospectus
(the "Prospectus"), which is subject to change, relating to the
issuance of the New Notes has been filed with the Securities and
Exchange Commission (the "SEC") on Feb. 16,
2021 (the "Registration Statement"), but has not yet become
effective. The New Notes may not be sold nor may offers to buy be
accepted prior to the time the Registration Statement becomes
effective. If and when issued, the New Notes will be registered
under the Securities Act of 1933, as amended. The aggregate
principal amount of Pool 1 Notes of each series that are accepted
for exchange will be based on the order of acceptance priority for
such series as set forth in the table below, and such that the
aggregate principal amount of Pool 1 Notes accepted in the Pool 1
Offer results in the issuance of New 2052 Notes in an amount not
exceeding $6,250,000,000 (the "New
2052 Notes Issue Cap"). The Pool 1 Notes are as follows:
Pool 1
Table
|
Title of
Security
|
CUSIP
Number
|
Principal
Amount
Outstanding
(MM)
|
Acceptance
Priority
Level
|
Reference
UST
Security (1)
|
Fixed
Spread
(basis
points)
|
Cash
Payment
Percent of
Premium (2)
|
Early
Exchange
Premium
(3) (4)
|
|
|
|
|
|
|
|
|
4.875% Notes due
2043
|
594918AX2
|
$174.572
|
1
|
30-year
|
+45
|
100%
|
$30
|
4.450% Notes due
2045
|
594918BL7
|
$1,288.337
|
2
|
30-year
|
+50
|
100%
|
$30
|
4.250% Notes due
2047
|
594918CA0
|
$1,584.630
|
3
|
30-year
|
+55
|
100%
|
$30
|
5.300% Notes due
2041
|
594918AM6
|
$770.339
|
4
|
30-year
|
+30
|
100%
|
$30
|
5.200% Notes due
2039
|
594918AD6
|
$558.545
|
5
|
30-year
|
+20
|
100%
|
$30
|
4.500% Notes due
2040
|
594918AJ3
|
$571.171
|
6
|
30-year
|
+25
|
100%
|
$30
|
3.700% Notes due
2046
|
594918BT0
|
$4,500.000
|
7
|
30-year
|
+52
|
100%
|
$30
|
3.750% Notes due
2043
|
594918AU8
|
$244.015
|
8
|
30-year
|
+45
|
100%
|
$30
|
3.750% Notes due
2045
|
594918BD5
|
$640.567
|
9
|
30-year
|
+45
|
100%
|
$30
|
3.500% Notes due
2042
|
594918AR5
|
$900.000
|
10
|
30-year
|
+35
|
100%
|
$30
|
4.100% Notes due
2037
|
594918BZ6
|
$1,916.467
|
11
|
30-year
|
+5
|
100%
|
$30
|
4.200% Notes due
2035
|
594918BK9
|
$1,000.000
|
12
|
30-year
|
-10
|
100%
|
$30
|
3.450% Notes due
2036
|
594918BS2
|
$2,250.000
|
13
|
30-year
|
-7
|
100%
|
$30
|
3.500% Notes due
2035
|
594918BC7
|
$1,500.000
|
14
|
30-year
|
-15
|
100%
|
$30
|
|
|
|
|
|
|
(1)
|
The "30-year
Reference UST Security" refers to the 1.625% U.S. Treasury Notes
due Nov. 15, 2050.
|
(2)
|
The "Cash Payment
Percent of Premium" is the percent (as set forth with respect to
each series of Pool 1 Notes in the table above) of the amount by
which the Total Exchange Consideration (as defined below and
calculated at the Pricing Time (as defined below)) exceeds $1,000
per $1,000 principal amount of such Pool 1 Notes.
|
(3)
|
Per $1,000 principal
amount of Pool 1 Notes.
|
(4)
|
Holders who validly
tender Pool 1 Notes after the Early Exchange Time (as defined
below) but on or before the Expiration Time (as defined below) will
not be eligible to receive the "Early Exchange Premium" of $30
principal amount of New 2052 Notes for each $1,000 principal amount
of Pool 1 Notes validly tendered and not validly withdrawn. For the
avoidance of doubt, the $30 per $1,000 Early Exchange Premium is
included within the Total Exchange Consideration, as calculated
using the Fixed Spread over the 30-year Reference UST Security as
described herein, and is not in addition to the Total Exchange
Consideration.
|
The aggregate principal amount of Pool 2 Notes of each series
that are accepted for exchange will be based on the order of
acceptance priority for such series as set forth in the table
below, and such that the aggregate principal amount of Pool 2 Notes
accepted in the Pool 2 Offer results in the issuance of New 2062
Notes in an amount not exceeding $1,250,000,000 (the "New 2062 Notes Issue Cap"
and, together with the New 2052 Notes Issue Cap, the "New Notes
Issue Cap"). The Pool 2 Notes are as follows:
Pool 2
Table
|
Title of
Security
|
CUSIP
Number
|
Principal
Amount
Outstanding
(MM)
|
Acceptance
Priority
Level
|
Reference
UST
Security (1)
|
Fixed
Spread
(basis
points)
|
Cash
Payment
Percent of
Premium (2)
|
Early
Exchange
Premium
(3) (4)
|
|
|
|
|
|
|
|
|
3.950% Notes due
2056
|
594918BU7
|
$1,954.510
|
1
|
30-year
|
+67
|
88%
|
$30
|
4.750% Notes due
2055
|
594918BM5
|
$326.735
|
2
|
30-year
|
+67
|
72%
|
$30
|
4.500% Notes due
2057
|
594918CB8
|
$883.777
|
3
|
30-year
|
+67
|
72%
|
$30
|
4.000% Notes due
2055
|
594918BE3
|
$793.850
|
4
|
30-year
|
+67
|
94%
|
$30
|
|
|
|
|
|
|
(1)
|
The "30-year
Reference UST Security" refers to the 1.625% U.S. Treasury Notes
due Nov. 15, 2050.
|
(2)
|
The "Cash Payment
Percent of Premium" is the percent (as set forth with respect to
each series of Pool 2 Notes in the table above) of the amount by
which the Total Exchange Consideration (calculated at the Pricing
Time) exceeds $1,000 per $1,000 principal amount of such Pool 2
Notes.
|
(3)
|
Per $1,000 principal
amount of Pool 2 Notes.
|
(4)
|
Holders who validly
tender Pool 2 Notes after the Early Exchange Time but on or before
the Expiration Time will not be eligible to receive the "Early
Exchange Premium" of $30 principal amount of New 2062 Notes for
each $1,000 principal amount of Pool 2 Notes validly tendered and
not validly withdrawn. For the avoidance of doubt, the $30 per
$1,000 Early Exchange Premium is included within the Total Exchange
Consideration, as calculated using the Fixed Spread over the
30-year Reference UST Security as described herein, and not in
addition to the Total Exchange Consideration.
|
The aggregate principal amount of New Notes to be issued
pursuant to the Exchange Offers will be subject to the applicable
New Notes Issue Cap. We may in our sole discretion, subject to the
applicable law, increase either or both of the New 2052 Notes Issue
Cap or the New 2062 Notes Issue Cap. We will accept tenders of
Existing Notes by series in accordance with the "acceptance
priority level" (in numerical priority order) for each such series
as set forth in the applicable table above.
Set forth below is a table summarizing the terms of the New
Notes offered in the Exchange Offers:
Title of
Series
|
Maturity
Date
|
Aggregate
Principal Amount
of Existing Notes
Accepted for
Tender (MM)
|
Benchmark
Security
|
Spread to
Benchmark
Security
|
New 2052
Notes
|
March 17,
2052
|
An amount of Pool 1
Notes such that the aggregate principal amount of New 2052 Notes
issued does not exceed $6,250.0.
|
1.625% U.S. Treasury
Notes due Nov. 15, 2050
|
+70 bps
|
New 2062
Notes
|
March 17,
2062
|
An amount of Pool 2
Notes such that the aggregate principal amount of New 2062 Notes
issued does not exceed $1,250.0.
|
1.625% U.S. Treasury
Notes due Nov. 15, 2050
|
+82 bps
|
Microsoft will pay interest on the New Notes at a rate per annum
equal to the yield, calculated in accordance with standard market
practice, that corresponds to the bid-side price of the 1.625%
30-year Reference UST Security due Nov. 15,
2050, as of the Pricing Time, as displayed on the Bloomberg
Government Pricing Monitor page FIT 1 plus the fixed spread set
forth in the table above.
The following is a summary of certain key elements of the
Exchange Offers:
The Exchange Offers will expire at 11:59
p.m., New York City time,
on March 15, 2021, unless extended by
Microsoft (such date and time, as they may be extended, the
"Expiration Time"). The "Settlement Date" will be promptly
following the Expiration Time and is expected to be March 17, 2021, which is the second business day
following the Expiration Time.
To be eligible to receive the Early Exchange Premium, holders
must validly tender their Existing Notes at or prior to
5:00 p.m., New York City time, on March 1, 2021, unless extended by Microsoft (such
date and time, as they may be extended, the "Early Exchange Time").
Tenders of Existing Notes in the Exchange Offers may be validly
withdrawn at any time at or prior to the Expiration Time, but will
thereafter be irrevocable, except in certain limited circumstances
where additional withdrawal rights are required by law. Microsoft
reserves the right to remove one or more of the Existing Notes from
the Exchange Offers if certain conditions (described below) for
such series of Existing Notes will not be achieved.
If holders validly tender Existing Notes prior to the Early
Exchange Time and do not validly withdraw such tendered Existing
Notes prior to the Expiration Time, and such Existing Notes are
accepted by Microsoft, such holders will receive, for each
$1,000 principal amount of Existing
Notes tendered and accepted, a combination of a principal amount of
New Notes and a cash payment with an aggregate value equal to the
Total Exchange Consideration (as defined below) as follows:
- an aggregate principal amount of New Notes equal to (a) the
Total Exchange Consideration for such Existing Notes minus (b) the
Cash Component (as defined below); and
- a cash payment equal to the Cash Component.
If holders validly tender Existing Notes after the Early
Exchange Time, but prior to the Expiration Time, and such Existing
Notes are accepted by Microsoft, such holders will receive, for
each $1,000 principal amount of
Existing Notes tendered and accepted, a combination of a principal
amount of New Notes and a cash payment with an aggregate value
equal to the Exchange Consideration (as defined below) as
follows:
- an aggregate principal amount of New Notes equal to (a) the
Total Exchange Consideration for such Existing Notes minus (b) the
Cash Component minus (c) the Early Exchange Premium; and
- a cash payment equal to the Cash Component.
In addition to the Total Exchange Consideration or Exchange
Consideration, as applicable, holders with Existing Notes that are
accepted for exchange will receive a cash payment representing (i)
all or a portion of the accrued and unpaid interest to, but not
including, the Settlement Date and (ii) amounts due in lieu of any
fractional amounts of New Notes. As The Depository Trust Company
("DTC") is the record holder of the Existing Notes, all holders of
any Existing Notes will also receive any applicable accrued and
unpaid interest on those Existing Notes in accordance with DTC
procedures, regardless of the record dates with respect to each
series of Existing Notes.
The "Pricing Time" will be 10:00
a.m., New York City time,
on March 2, 2021, unless the Early
Exchange Time is extended, in which case a new Pricing Time may be
established with respect to the Exchange Offers. In the event that
the Early Exchange Time is not extended, the Pricing Time will
remain the same.
The "Total Exchange Consideration" (calculated at the Pricing
Time in accordance with the Prospectus) for the Existing Notes
validly tendered prior to the Early Exchange Time, and not validly
withdrawn prior to the Expiration Time, is equal to the discounted
value on the Settlement Date of the remaining payments of principal
and interest per $1,000 principal
amount of the Existing Notes through the applicable maturity date
or par call date (as applicable) of the Existing Notes, using a
yield equal to the sum of: (i) the bid-side yield on the applicable
30-year Reference UST Security set forth with respect to each
series of Existing Notes in the tables above plus (ii) the
applicable fixed spread set forth with respect to each series of
Existing Notes in the tables above, minus accrued and unpaid
interest on such series of Existing Notes up to but not including
the Settlement Date. For avoidance of doubt, the $30 per $1,000
Early Exchange Premium is included within the Total Exchange
Consideration, as calculated using the Fixed Spread of the 30-year
Reference UST Security and is not in addition to the Total Exchange
Consideration.
The "Exchange Consideration" for the Existing Notes validly
tendered after the Early Exchange Time but prior to the Expiration
Time is equal to the Total Exchange Consideration minus the
applicable Early Exchange Premium.
The "Cash Component" means the portion of the Total Exchange
Consideration to be paid to holders in cash and is equal to (i) the
applicable Cash Payment Percent of Premium for such series of
Existing Notes multiplied by (ii) (a) the applicable Total Exchange
Consideration for such series of Existing Notes minus (b)
$1,000.
The completion of the Exchange Offers for each series of
Existing Notes is subject to, and conditional upon, the
satisfaction or waiver of certain conditions, including, among
other things (i) the Registration Statement having been declared
effective by the SEC on or prior to the Expiration Time and
remaining effective on the Settlement Date; (ii) the condition
that, as of the Pricing Time, the combination of the yield of the
New Notes and the Total Exchange Consideration for the applicable
series of Existing Notes would result in the New Notes and such
Existing Notes not being treated as "substantially different" under
FASB Accounting Standards Codification ("ASC") 470-50; (iii) the
requirement, with respect to the Exchange Offers of New Notes for
Existing Notes, that we issue at least (a) $3,000,000,000 aggregate principal amount of New
2052 Notes and (b) $750,000,000
aggregate principal amount of New 2062 Notes; (iv) the Yield
Condition (as described in the Prospectus) (for any applicable
series of Existing Notes); and (v) that nothing has occurred or may
occur that would or might, in our reasonable judgment, be expected
to prohibit, prevent, restrict or delay an Exchange Offer or delay
the scheduled Pricing Time or impair us from realizing the
anticipated benefits of an Exchange Offer. Microsoft may, at its
option, waive any such conditions at or by the Expiration Time,
except the condition that the registration statement of which the
Prospectus forms a part has been declared effective by the SEC on
or prior to the Expiration Time and remains effective on the
Settlement Date.
Copies of the Prospectus pursuant to which the Exchange Offers
are being made, may be obtained from D.F. King & Co., Inc., the
information agent and exchange agent for the Exchange Offers, at
212-269-5552 (to exchange), at 877-864-5060 (for information U.S.
toll-free), at 212-269-5550 (information for brokers), at
www.dfking.com/microsoft, or at microsoft@dfking.com. Questions
regarding the terms and conditions of the Exchange Offers should be
directed to the following joint lead dealer managers:
Morgan
Stanley
|
Wells Fargo
Securities
|
1585 Broadway, 4th
Floor
New York, NY 10036
Toll Free: (800) 624-1808
Collect: (212) 761-1057
Attn: Liability Management Group
|
550 South Tryon
Street, 5th Floor
Charlotte, North Carolina 28202
Toll Free: (866) 309-6316
Collect: (704) 410-4756
Attn: Liability Management Group
|
The Exchange Offers are made only by and pursuant to the terms
and subject to the conditions set forth in the Prospectus, which
forms a part of the Registration Statement after it is declared
effective by the SEC, and the information in this news release is
qualified by reference to such Prospectus and the Registration
Statement. None of Microsoft, the dealer managers or the
information agent and exchange agent makes any recommendations as
to whether holders should tender their Existing Notes pursuant to
the Exchange Offers. Holders must make their own decisions as to
whether to tender Existing Notes, and, if so, the principal amount
of Existing Notes to tender.
This news release does not constitute an offer or a solicitation
by Microsoft of an offer to buy, nor shall there be any sale of
securities in any state or jurisdiction in which such offer or
solicitation or sale would be unlawful.
In order to participate in any Exchange Offer, holders of the
Existing Notes located or resident in Canada are required to complete, sign and
submit to the exchange agent a Canadian Eligibility Form, which may
be obtained from D.F. King & Co., Inc. contacts above, to
confirm they satisfy applicable Canadian eligibility requirements
and to provide certain additional information.
Any holder of the Existing Notes located in any Member State of
the European Economic Area that is a retail investor will not be
able to participate in the Exchange Offers. For purposes of this
paragraph, a retail investor means a person who is one (or more) of
the following: (i) a retail client as defined in point (11) of
Article 4(1) of the EU Directive on Markets in Financial
Instruments (2014/65/EU) (as amended, "MiFID II"); (ii) a customer
within the meaning of Directive (EU) 2016/97, where that customer
would not qualify as a professional client as defined in point (10)
of Article 4(1) of MiFID II or (iii) not a qualified investor as
defined in Regulation (EU) 2017/1129 (as amended, the "Prospectus
Regulation").
Any holder of the Existing Notes located in the United Kingdom that is a retail investor will
not be able to participate in the Exchange Offers. For purposes of
this paragraph, a retail investor means a person who is one (or
more) of the following: (i) a retail client, as defined in point
(8) of Article 2 of Regulation (EU) No 2017/565 as it forms part of
domestic law by virtue of the European Union (Withdrawal) Act 2018
("EUWA"); (ii) a customer within the meaning of the provisions of
the Financial Services and Markets Act 2000 (as amended, "FSMA")
and any rules or regulations made under the FSMA to implement
Directive (EU) 2016/97, where that customer would not qualify as a
professional client, as defined in point (8) of Article 2(1) of
Regulation (EU) No 600/2014 as it forms part of domestic law by
virtue of the EUWA; or (iii) not a qualified investor as defined in
Article 2 of Regulation (EU) 2017/1129 as it forms part of domestic
law by virtue of the EUWA.
About Microsoft
Microsoft (Nasdaq "MSFT" @microsoft) enables digital
transformation for the era of an intelligent cloud and an
intelligent edge. Its mission is to empower every person and every
organization on the planet to achieve more.
Forward-Looking Statements
Statements in this news release are "forward-looking statements"
based on current expectations and assumptions that are subject to
risks and uncertainties. Actual results could differ materially
because of factors described above as well as:
- intense competition in all of our markets that may lead to
lower revenue or operating margins;
- increasing focus on cloud-based services presenting execution
and competitive risks;
- significant investments in products and services that may not
achieve expected returns;
- acquisitions, joint ventures, and strategic alliances that may
have an adverse effect on our business;
- impairment of goodwill or amortizable intangible assets causing
a significant charge to earnings;
- cyberattacks and security vulnerabilities that could lead to
reduced revenue, increased costs, liability claims, or harm to our
reputation or competitive position;
- disclosure and misuse of personal data that could cause
liability and harm to our reputation;
- the possibility that we may not be able to protect information
stored in our products and services from use by others;
- abuse of our advertising or social platforms that may harm our
reputation or user engagement;
- the development of the internet of things presenting security,
privacy, and execution risks;
- issues about the use of artificial intelligence in our
offerings that may result in competitive harm, legal liability, or
reputational harm;
- excessive outages, data losses, and disruptions of our online
services if we fail to maintain an adequate operations
infrastructure;
- quality or supply problems;
- government litigation and regulatory activity relating to
competition rules that may limit how we design and market our
products;
- potential liability under trade protection, anti-corruption,
and other laws resulting from our global operations;
- laws and regulations relating to the handling of personal data
that may impede the adoption of our services or result in increased
costs, legal claims, fines, or reputational damage;
- claims against us that may result in adverse outcomes in legal
disputes;
- uncertainties relating to our business with government
customers;
- additional tax liabilities;
- the possibility that we may fail to protect our source
code;
- legal changes, our evolving business model, piracy, and other
factors may decrease the value of our intellectual property;
- claims that Microsoft has infringed the intellectual property
rights of others;
- damage to our reputation or our brands that may harm our
business and operating results;
- adverse economic or market conditions that may harm our
business;
- catastrophic events or geopolitical conditions, such as the
COVID-19 pandemic, that may disrupt our business;
- exposure to increased economic and operational uncertainties
from operating a global business, including the effects of foreign
currency exchange; and
- the dependence of our business on our ability to attract and
retain talented employees.
For more information about risks and uncertainties associated
with Microsoft's business, please refer to the "Management's
Discussion and Analysis of Financial Condition and Results of
Operations" and "Risk Factors" sections of Microsoft's SEC filings,
including, but not limited to, its annual report on Form 10-K and
quarterly reports on Form 10-Q that are incorporated by reference
in the Prospectus forming a part of the Registration Statement,
copies of which may be obtained by contacting Microsoft's Investor
Relations department at (800) 285-7772 or at Microsoft's Investor
Relations website
at http://www.microsoft.com/en-us/investor.
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SOURCE Microsoft Corporation