Summary
Microsoft Corporation (MSFT) has filed an 8-K report detailing the issuance of $1.25 billion in Zero Coupon Convertible Senior Notes due 2013. These notes do not bear interest and will mature on June 15, 2013. The issuance is aimed at raising capital with specific terms for conversion and repurchase, including provisions for corporate events and a fundamental change. To mitigate potential dilution from the convertible notes, Microsoft also entered into capped call transactions. These transactions are designed to offset the dilutive effect of any conversion by setting a cap price, effectively increasing the conversion price to approximately $37.16. The notes were offered to qualified institutional buyers and are not registered under the Securities Act of 1933.
Key Highlights
- 1Microsoft issued $1.25 billion in Zero Coupon Convertible Senior Notes due 2013.
- 2The notes do not accrue interest but will mature on June 15, 2013.
- 3Holders can convert notes under specific conditions related to stock price performance, trading price, or corporate events.
- 4Upon conversion, Microsoft has the option to pay in cash, stock, or a combination thereof.
- 5In case of a fundamental change, noteholders can require Microsoft to repurchase the notes at 100% of the principal amount plus accrued special interest.
- 6Microsoft entered into capped call transactions to reduce potential dilution from note conversions, with a cap price of approximately $37.16.
- 7The notes were offered and sold only to qualified institutional buyers and are not registered under the Securities Act.