Microsoft Corp. (NASDAQ: MSFT) ("Microsoft") announced today the pricing terms with respect to its offers to (i) exchange (the "Pool 1 Offer") the ten series of notes described in the table below (collectively, the "Pool 1 Notes") for a new series of Microsoft's 2.525% notes due June 1, 2050 (the "New 2050 Notes") and a cash payment, as applicable. For each $1,000 principal amount of Pool 1 Notes validly tendered and not validly withdrawn prior to 11:59 p.m., New York City time, on May 28, 2020 (the "Expiration Time") and accepted by Microsoft, the following table sets forth the yield, the total exchange consideration, the principal amount of the New 2050 Notes and the amount of the cash payment, as applicable:
Pool 1 Table(1) Title of CUSIP Acceptance Priority Level Reference Fixed Yield(3) Early Total Principal Cash Payment(4) Security Number UST Security(2) Spread Exchange Exchange Amount (basis Premium(4) Consideration of New points) (4)(5) Notes(6) 4.875% Notes due 2043 594918AX2 1 30-year +110 2.375% $30 $1,441.62 $1,000.00 $441.62 5.300% Notes due 2041 594918AM6 2 30-year +105 2.325% $30 $1,486.31 $1,000.00 $486.31 4.450% Notes due 2045 594918BL7 3 30-year +110 2.375% $30 $1,388.59 $1,000.00 $388.59 4.250% Notes due 2047 594918CA0 4 30-year +110 2.375% $30 $1,363.95 $1,000.00 $363.95 5.200% Notes due 2039 594918AD6 5 30-year +95 2.225% $30 $1,458.92 $1,000.00 $458.92 4.500% Notes due 2040 594918AJ3 6 30-year +100 2.275% $30 $1,360.57 $1,000.00 $360.57 3.750% Notes due 2043 594918AU8 7 30-year +110 2.375% $30 $1,237.91 $1,000.00 $237.91 3.750% Notes due 2045 594918BD5 8 30-year +110 2.375% $30 $1,251.94 $1,000.00 $251.94 4.100% Notes due 2037 594918BZ6 9 30-year +87 2.145% $30 $1,266.05 $1,000.00 $266.05 4.200% Notes due 2035 594918BK9 10 30-year +75 2.025% $30 $1,278.89 $1,000.00 $278.89
(1) The figures in this table assume a settlement date of June 1, 2020. (2) The "30-year Reference UST Security" refers to the 2.375% U.S. Treasury Notes due November 15, 2049. (3) Reflects the bid-side yield of the 30-year Reference UST Security as of the pricing time of 1.275% plus the applicable Fixed Spread, calculated in accordance with the procedures set forth in the Prospectus. (4) Per $1,000 principal amount of Pool 1 Notes. (5) Holders who validly tender Pool 1 Notes after 5:00 p.m., New York City time, on May 13, 2020 (the "Early Exchange Time") will not be eligible to receive the Early Exchange Premium of $30 principal amount of the New 2050 Notes for each $1,000 principal amount of Pool 1 Notes validly tendered and not withdrawn. For the avoidance of doubt, the $30 per $1,000 Early Exchange Premium is included within the total exchange consideration and is not in addition to the total exchange consideration. (6) Does not reflect any accrued and unpaid interest. The Company will pay accrued and unpaid interest on the Existing Notes up to, but not including, the settlement date.
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 2.675% notes due June 1, 2060 (the "New 2060 Notes" and, together with the New 2050 Notes, the "New Notes") and a cash payment, as applicable. For each $1,000 principal amount of Pool 2 Notes validly tendered and not validly withdrawn prior to the Expiration Time and accepted by Microsoft, the following table sets forth the yield, the total exchange consideration, the principal amount of the New 2060 Notes and the amount of the cash payment, as applicable:
Pool 2 Table(1) Title of CUSIP Acceptance Priority Level Reference Fixed Yield(3) Early Total Principal Cash Payment(4) Security Number UST Security(2) Spread Exchange Exchange Amount (basis Premium(4) Consideration of New points) (4)(5) Notes(6) 4.750% Notes due 2055 594918BM5 1 30-year +125 2.525% $30 $1,514.30 $1,138.86 $375.44 4.000% Notes due 2055 594918BE3 2 30-year +125 2.525% $30 $1,336.46 $1,000.00 $336.46 4.500% Notes due 2057 594918CB8 3 30-year +125 2.525% $30 $1,466.62 $1,107.32 $359.30 3.950% Notes due 2056 594918BU7 4 30-year +125 2.525% $30 $1,333.83 $1,000.00 $333.83
(1) The figures in this table reflect any optional adjustments of the total exchange consideration as permitted under the terms and conditions in the Prospectus forming part of the Registration Statement and assume a settlement date of June 1, 2020. (2) The "30-year Reference UST Security" refers to the 2.375% U.S. Treasury Notes due November 15, 2049. (3) Reflects the buy-side yield of the 30-year Reference UST Security as of the pricing time of 1.275% plus the applicable Fixed Spread, calculated in accordance with the procedures set forth in the Prospectus. (4) Per $1,000 principal amount of Pool 2 Notes. (5) Holders who validly tender Pool 2 Notes after the Early Exchange Time will not be eligible to receive the Early Exchange Premium of $30 principal amount of the New 2060 Notes for each $1,000 principal amount of Pool 2 Notes validly tendered and not withdrawn. For the avoidance of doubt, the $30 per $1,000 Early Exchange Premium is included within the total exchange consideration and is not in addition to the total exchange consideration. (6) Does not reflect any accrued and unpaid interest. The Company will pay accrued and unpaid interest on the Existing Notes up to, but not including, the settlement date.
The aggregate principal amount of Pool 1 Notes and Pool 2 Notes of each series that are accepted for exchange will be based on the order of acceptance priority for such series, as applicable, as set forth in the tables above, up to $6,250,000,000 aggregate principal amount (the "New 2050 Notes Issue Cap") and up to $3,750,000,000 aggregate principal amount (the "New 2060 Notes Issue Cap," increased from $3,000,000,000), respectively. Holders who validly tender the Existing Notes after the Early Exchange Time but on or before the Expiration Time will only be eligible to receive the Exchange Consideration, which equals the Total Exchange Consideration minus the Early Exchange Premium as detailed in the tables above.
As permitted under the terms and conditions in the Registration Statement (as defined below), the Company has elected to increase the Cash Payment Percent of Premium on the 4.750% Notes due 2055 from 70% to 73%, the 4.500% Notes due 2057 from 70% to 77%, and the 3.950% Notes due 2056 from 90% to 100%. These changes are reflected in the Cash Payment amounts shown in the tables above.
In addition to the principal amount of New Notes and applicable cash payment specified in the tables above, 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, in each case, as described in the Prospectus.
A Registration Statement on Form S-4, including a prospectus (the "Prospectus"), which is subject to change, relating to the New Notes has been filed with the Securities and Exchange Commission (the "SEC") on April 30, 2020 (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. 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 in which such offer or solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state.
Consummation of the Exchange Offers is subject to a number of conditions as set forth in the Prospectus included in the Registration Statement, including, among other things, the Registration Statement of which the Prospectus forms a part having been declared effective by the SEC and remaining effective on the settlement date.
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.
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 800-431-9645 (for information U.S. Toll-free), at 212-269-5550 (information for brokers), at www.dfking.com/microsoft, or at firstname.lastname@example.org. Questions regarding the terms and conditions of the Exchange Offers should be directed to the following joint lead dealer managers:
BofA Securities Deutsche Bank Securities Inc. 620 South Tryon Street, 20th Floor 60 Wall Street Charlotte, NC 28255 New York, NY 10005 Toll Free: (888) 292-0070 Toll Free: (866) 627-0391 Collect: (980) 387-3907 Collect: (212) 250-2955 Attn: Liability Management Group Attn: Liability Management Group
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 or in the United Kingdom that is a retain investor will not be able to participate in the Exchange Offers. For these purposes, a retain 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"); or (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.
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.
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;
-- 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;
-- claims against us that may result in adverse outcomes in legal disputes;
-- 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;
-- additional tax liabilities;
-- damage to our reputation or our brands that may harm our business and operating results;
-- exposure to increased economic and operational uncertainties from operating a global business, including the effects of foreign currency exchange;
-- uncertainties relating to our business with government customers;
-- 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; 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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