8-KSecurities & ListingCorporate ChangesExhibits & Filings

INTERNATIONAL BUSINESS MACHINES CORP 8-K Report, Unregistered Securities Sale (Oct 1, 2021)

Filed October 1, 2021For Securities:IBM

Summary

International Business Machines Corporation (IBM) filed an 8-K on October 1, 2021, detailing a significant internal equity transaction and an amendment to its Certificate of Incorporation to establish Series A Preferred Stock. The company issued 54,908,899 shares of Series A Preferred Stock to a wholly owned subsidiary in exchange for common stock. This move, conducted under an exemption from public offering requirements, establishes a new class of preferred stock with specific dividend, voting, and liquidation rights. The establishment of Series A Preferred Stock is primarily an internal structural change. While it designates 75,000,000 shares, the company explicitly states no intention to issue these shares to third parties. The preferred stock carries a dividend preference of three times that of common stock and offers a single vote per share, though shares held by subsidiaries will not have voting rights. These terms provide a framework for potential future strategic actions or reorganizations, and investors should note the non-public nature of this issuance.

Key Highlights

  • 1IBM issued 54,908,899 shares of Series A Preferred Stock to a wholly owned subsidiary on October 1, 2021.
  • 2This issuance was made in exchange for 164,726,696 shares of IBM common stock held by the subsidiary.
  • 3The transaction was conducted under the exemption provided by Section 4(a)(2) of the Securities Act of 1933, indicating no public offering.
  • 4IBM amended its Certificate of Incorporation to establish the terms of 75,000,000 authorized shares of Series A Preferred Stock.
  • 5Series A Preferred Stock holders are entitled to dividends equal to three times the common stock dividend.
  • 6Each share of Series A Preferred Stock carries one vote, but shares held by subsidiaries will not be entitled to voting rights.
  • 7Upon liquidation, holders of Series A Preferred Stock are entitled to the greater of par value or the value distributable on three shares of common stock.

Frequently Asked Questions

The main purpose of this 8-K filing is to report on an internal equity transaction where IBM issued Series A Preferred Stock to one of its subsidiaries and to detail the amendment of its Certificate of Incorporation to establish the terms of this new preferred stock class. This is primarily a corporate restructuring event.

The filing states that IBM does not intend to issue or transfer any shares of Series A Preferred Stock to third parties. The issuance is between IBM and its wholly owned subsidiary. Therefore, this specific transaction is not expected to directly impact common stockholders in terms of dilution or immediate changes to their holdings, though the dividend preference and voting rights are significant structural elements.

The Series A Preferred Stock carries a dividend preference (three times the common stock dividend), voting rights (one vote per share, though subsidiary-held shares are non-voting), and liquidation preferences (greater of par value or distribution on three common shares). These rights are detailed in the amended Certificate of Incorporation.

The transaction was conducted in reliance on the exemption in Section 4(a)(2) of the Securities Act of 1933, which allows for transactions not involving a public offering. This suggests the transaction was an internal corporate reorganization or restructuring, not an effort to raise capital from the public.