Microsoft Corp. (NASDAQ: MSFT) (“Microsoft”) today announced the expiration of 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, 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 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.
A Registration Statement on Form S-4 (File No. 333-237925), as amended by Amendment No. 1 thereto (the “Registration Statement”), relating to the issuance of the New Notes has been filed with the Securities and Exchange Commission (the “SEC”) and has become effective. The New Notes, upon issuance, will be registered under the Securities Act of 1933, as amended, pursuant to the Registration Statement.
The table below identifies the aggregate principal amount of each series of Pool 1 Notes validly tendered (and not validly withdrawn) in the Pool 1 Offer and the principal amount of each series of Pool 1 Notes, based on the order of acceptance priority for such series, that Microsoft expects to accept on the Settlement Date (as defined below):
| Pool 1 Table | |||||
| Title of Security | CUSIP Number | Consideration Exchanged for | Acceptance Priority Level | Principal Amount Tendered(1) | Principal Amount Microsoft Expects to Accept |
| 4.875% Notes due 2043 | 594918AX2 | New 2050 Notes | 1 | $325,428,000 | $325,428,000 |
| 5.300% Notes due 2041 | 594918AM6 | New 2050 Notes | 2 | $229,661,000 | $229,661,000 |
| 4.450% Notes due 2045 | 594918BL7 | New 2050 Notes | 3 | $1,711,663,000 | $1,711,663,000 |
| 4.250% Notes due 2047 | 594918CA0 | New 2050 Notes | 4 | $1,415,370,000 | $1,415,370,000 |
| 5.200% Notes due 2039 | 594918AD6 | New 2050 Notes | 5 | $191,455,000 | $191,455,000 |
| 4.500% Notes due 2040 | 594918AJ3 | New 2050 Notes | 6 | $428,829,000 | $428,829,000 |
| 3.750% Notes due 2043 | 594918AU8 | New 2050 Notes | 7 | $255,985,000 | $255,985,000 |
| 3.750% Notes due 2045 | 594918BD5 | New 2050 Notes | 8 | $1,109,437,000 | $1,109,433,000 |
| 4.100% Notes due 2037 | 594918BZ6 | New 2050 Notes | 9 | $1,569,224,000 | $583,533,000 |
| 4.200% Notes due 2035 | 594918BK9 | New 2050 Notes | 10 | $325,218,000 | $0 |
- The aggregate principal amounts of each series that have been validly tendered for exchange and not validly withdrawn, as of 11:59 p.m., New York City time, on May 28, 2020 (the “Expiration Time”), based on information provided by the exchange agent to Microsoft.
The table below identifies the aggregate principal amount of each series of Pool 2 Notes validly tendered (and not validly withdrawn) in the Pool 2 Offer and the principal amount of each series of Pool 2 Notes, based on the order of acceptance priority for such series, that Microsoft expects to accept on the Settlement Date:
| Pool 2 Table | |||||
| Title of Security | CUSIP Number | Consideration Exchanged for | Acceptance Priority Level | Principal Amount Tendered(1) | Principal Amount Microsoft Expects to Accept |
| 4.750% Notes due 2055 | 594918BM5 | New 2060 Notes | 1 | $673,265,000 | $673,265,000 |
| 4.000% Notes due 2055 | 594918BE3 | New 2060 Notes | 2 | $1,456,150,000 | $1,456,150,000 |
| 4.500% Notes due 2057 | 594918CB8 | New 2060 Notes | 3 | $1,116,223,000 | $1,116,223,000 |
| 3.950% Notes due 2056 | 594918BU7 | New 2060 Notes | 4 | $1,693,876,000 | $295,490,000 |
- The aggregate principal amounts of each series that have been validly tendered for exchange and not validly withdrawn, as of the Expiration Time, based on information provided by the exchange agent to Microsoft.
In the Exchange Offers, according to the information provided by D.F. King & Co., Inc., the information agent and exchange agent for the Exchange Offers, $7,562,270,000 aggregate principal amount of Pool 1 Notes and $4,939,514,000 aggregate principal amount of Pool 2 Notes were validly tendered and not validly withdrawn at or prior to the Expiration Time, as more fully set forth above.
The Exchange Offers expired at 11:59 p.m., New York City time, on May 28, 2020. Following the Expiration Time, tenders of the Existing Notes may not be validly withdrawn. As of the Expiration Time, all conditions to the Exchange Offers were satisfied. Microsoft currently anticipates that the settlement date of the Exchange Offers will be June 1, 2020 (the “Settlement Date”).
Based on the amount of Existing Notes tendered in the Exchange Offers and in accordance with the terms of the Exchange Offers, Microsoft expects to accept, on the Settlement Date, (a) the following Pool 1 Notes validly tendered (and not validly withdrawn): (i) all of the Pool 1 Notes listed in the Pool 1 Table above at Acceptance Priority Levels 1 through 7, (ii) $1,109,433,000 aggregate principal amount of its 3.750% Notes due 2045 (which is less than the amount tendered (and not validly withdrawn) due to minimum denomination requirements of the Exchange Offers) and (iii) $583,533,000 aggregate principal amount of its 4.100% Notes due 2037 with a proration factor for such notes equal to approximately 37.19% of such notes validly tendered (and not validly withdrawn) and (b) the following Pool 2 Notes validly tendered (and not validly withdrawn): (i) all of the Pool 2 Notes listed in the Pool 2 Table at Acceptance Priority Levels 1 through 3 and (ii) $295,490,000 aggregate principal amount of its 3.950% Notes due 2056 with a proration factor for such notes equal to approximately 17.44% of such notes validly tendered (and not validly withdrawn) as set forth above. Microsoft does not expect to accept any of the Pool 1 Notes listed in the Pool 1 Table at Acceptance Priority Level 10.
On the Settlement Date, Microsoft expects to deliver an aggregate principal amount of $6,249,997,000 of New 2050 Notes and an aggregate principal amount of $3,750,000,000 of New 2060 Notes and cash payments, as applicable, pursuant to Microsoft’s prospectus dated May 19, 2020 (the “Prospectus”), filed with the SEC on May 19, 2020, relating to the New Notes.
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;
- 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.
