IBM Announces Debt Exchange Offers

IBM Announces Debt Exchange Offers

IBM
Doug Shelton, 914/499-6533Doug Shelton, 914/499-6533
[e-mail]

IBM (NYSE: IBM) today announced that it has commenced offers to exchange (the “exchange offers”) any and all of its 7.125 percent debentures due 2096, 7.000 percent debentures due 2045 and 8.000 percent notes due 2038 for a new series of 5.600 percent senior notes due 2039 (the “new notes”) and cash. To encourage holders to tender early, IBM is offering an early exchange premium to holders who validly tender their old notes before 5:00 p.m. EST, on Friday, November 20, 2009 (the “early exchange date”). The exchange offers expire at 12:00 a.m. EST, on Monday, December 7, 2009 (the “expiration date”). We are conducting the exchange offers to retire high coupon long-dated debt in a favorable interest rate environment. The terms and conditions of the exchange offers are described in IBM’s exchange circular dated November 6, 2009 (the “exchange circular”).

The new notes will mature on November 30, 2039 and will bear interest from November 30, 2009, the early settlement date, at a rate per annum of 5.600 percent. The new notes will be unsecured senior obligations of IBM and will rank equally with all of IBM’s other unsecured senior indebtedness.

IBM is offering to exchange its 7.125 percent debentures due December 1, 2096 (CUSIP No. 459200 AP 6) (the “7.125 percent notes”), its 7.000 percent debentures due October 30, 2045 (CUSIP No. 459200 AN 1) (the “7.000 percent notes”) and its 8.000 percent notes due October 15, 2038 (CUSIP No. 459200 GL 9)(the “8.000 percent notes,” and together with the 7.125 percent notes and the 7.000 percent notes, the “old notes”) for new notes and cash in the amounts described below.

Old Notes	Â	  Maturity Date	Â	Principal Amount Outstanding	Â	Early Exchange Consideration(1)(2)	Â	Early Exchange Premium(1)	Â	Late Exchange Consideration(1)
7.125% Notes		December 1, 2096		$850,000,000		$1,000 principal amount of New Notes and a cash amount of $259.01		$30 principal amount of New Notes		$970 principal amount of New Notes and a cash amount of $259.01
										Â
7.000% Notes		October 30, 2045		$150,000,000		$1,000 principal amount of New Notes and a cash amount of $224.62		$20 principal amount of New Notes		$980 principal amount of New Notes and a cash amount of $224.62
										Â
8.000% Notes		October 15, 2038		$1,000,000,000		$1,100 principal amount of New Notes and a cash amount of $268.74		$30 principal amount of New Notes		$1,070 principal amount of New Notes and a cash amount of $268.74

___________________________
⁽¹⁾ For each $1,000 principal amount of Old Notes.
⁽²⁾ Includes Early Exchange Premium.

IBM will also pay accrued and unpaid interest in cash on the old notes accepted in the exchange offers to, but not including, the applicable settlement date minus, in the case of the final settlement date, accrued and unpaid interest on the new notes to, but not including, the final settlement date. Subject to applicable law, IBM has the right in its absolute discretion to waive, modify, extend, amend, terminate or withdraw the exchange offers with respect to each series of old notes and to extend the early exchange date, the expiration date or any related dates for any of the exchange offers.

IBM expects that holders who validly tender their old notes before the early exchange date will receive their new notes and cash payments on Monday, November 30, 2009, and that holders who validly tender their old notes after the early exchange date but before the expiration date will receive their new notes and cash payments on Thursday, December 10, 2009.

The exchange offers are subject to the satisfaction or waiver of certain conditions, including our ability to issue at least $500 million aggregate principal amount of new notes in exchange for all old notes tendered and accepted for exchange in order to complete any of the exchange offers at the early exchange date or the expiration date. IBM is making each exchange offer independently of the other exchange offers, and, except as described in this paragraph, no exchange offer is conditioned upon completion of any other exchange offer.

Global Bondholders Service Corporation is the exchange and information agent for the exchange offers. Requests for copies of the exchange circular and questions regarding the exchange offers may be directed to Global Bondholder Services Corporation at [phone]. Credit Suisse Securities (USA) LLC, Deutsche Bank Securities Inc. and J.P. Morgan Securities Inc. are the financial advisors for the exchange offers.

This announcement is not an offer to exchange or a solicitation of an offer to exchange with respect to any securities and is qualified in its entirety by reference to the exchange circular. The exchange offers will be made solely pursuant to the terms and conditions of the exchange circular.

Neither the United States Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed upon the adequacy or accuracy of the exchange circular. Any representation to the contrary is a criminal offense.

The exchange offers are not being made to, nor will IBM accept tenders of old notes from, holders in any jurisdiction in which the exchange offers or the acceptance thereof would not be in compliance with the securities or blue sky laws of such jurisdiction.

The new notes have not been and will not be registered under the Securities Act of 1933. IBM is making the exchange offers in reliance on the exemption from the registration requirements of the Securities Act of 1933 afforded by Section 3(a)(9) thereof.

Except for the historical information and discussions contained herein and therein, statements contained in this press release and the exchange circular may constitute forward-looking statements. These statements involve a number of risks, uncertainties and other factors that could cause actual results to differ materially, including the following: a downturn in the economic environment and corporate IT spending budgets; our failure to meet growth and productivity objectives; a failure of our innovation initiatives; risks from investing in growth opportunities; failure of our intellectual property portfolio to prevent competitive offerings and our failure to obtain necessary licenses; breaches of data protection; fluctuations in revenues and purchases; impact of local legal, economic, political and health conditions; adverse effects from environmental matters, tax matters and our pension plans; ineffective internal controls; our use of accounting estimates; competitive conditions; our ability to attract and retain key personnel and our reliance on critical skills; impact of relationships with critical suppliers; currency fluctuations and customer financing risks; impact of changes in market liquidity conditions and customer credit risk on receivables; reliance on third party distribution channels; our ability to successfully manage acquisitions and alliances; risk factors related to IBM securities; and other risks, uncertainties and factors discussed in our Form 10-Q, Form 10-K and in our other filings with the Securities and Exchange Commission or in materials incorporated therein by reference. We assume no obligation to update or revise any forward-looking statements.

IBM

Doug Shelton, 914/499-6533

[e-mail]