Microsoft Corp (NASDAQ: MSFT) announced that it sold $1.15 billion worth of convertible senior notes due in 2013 as it seeks to replace it short-term debt with longer-dated debt.
The bonds, which do not pay interest, can be traded for shares when the company’s stock rises to $33.40, a 33% increase from its current price which is between $25.00 and $26.00. Microsoft Corp (NASDAQ: MSFT) also reserved the right to exchange the notes for cash in some circumstances.
“Microsoft will use the net proceeds from the offering of convertible notes to repay short-term debt,” the Redmond, Washington-based company said in the statement.
As of March 31st, Microsoft had $2.25 billion worth of short-term debt according to a SEC filing. The convertible notes give the company more stability with debt at a fixed rate. Convertible bonds allow investors to convert debt into common equity stock at a pre-set rate under specified conditions.
Microsoft Corp (NASDAQ: MSFT) also gave underwriters the option to buy an additional $100 million in notes.
