IBM offers to swap higher-interest debt

AP News
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Posted: Nov 06, 2009 5:34 PM

IBM Corp. on Friday made an offer to certain debt holders to swap their long-term debt with bonds carrying a lower interest rate plus cash in a move to save money and bolster its balance sheet.

The computer maker said it started a tender offer to exchange its 7.125 percent debentures due 2096, 7 percent debentures due 2045 and 8 percent notes due 2038 for senior notes due in 2039 that carry a lower interest rate of 5.6 percent.

To entice investors to exchange higher-interest debt for new notes that pay a lower rate, IBM will give them cash as well. In addition, holders of the 2038 notes who exchange their debt will get 10 percent more worth of new notes.

The new debt will be unsecured senior notes.

Investors who swap their debt early will get the full face value of the security. The deadline for the tender offer is 5 pm. EST on Nov. 20.

Shares of IBM, based in Armonk, N.Y., rose 94 cents to close at $123.49 on Friday.