Press Releases

February 09, 2015

Minority Firms to Co-Manage Microsoft $10.75 Billion debt offering-A Breakthrough for the business

Microsoft today announced the inclusion of four minority firms who will serve as co-managers of its $10.75 billion debt offering.  The firms include:  CastleOak Securities; Loop Capital Markets; Samuel A. Ramirez and Co., and The Williams Capital Group.  It is the giant tech company’s largest debt offering to date.

Reverend Jackson stated,

“Microsoft is making a major statement with the inclusion of minority financial services firms in their debt offering.    This is a major breakthrough for the business of diversity.   We commend Microsoft for their leadership and commitment to diversity and inclusion.

“The good news is that minority inclusion in the debt offering not only empowers minority firms, but it also value added for Microsoft.  Castle Oak Securities; Loop Capital Markets; Samuel A. Ramirez and Co., and The Williams Capital Group are experienced firms with proven track records.  Given the opportunity, they perform at the top of the class.   We are delighted that they are participating in Microsoft’s debt offering.  They are changing the flow of the river.”

Rev. Jackson added,

“Diversity and inclusion is not limited to workforce development and transformation.  There is also a “business dimension” that must also be addressed – supplier diversity and procurement opportunities, access to capital for minority start-ups and companies, and inclusion of minority financial services firms in debt offerings, IPO’s and other transactions. 

Microsoft communicated to RainbowPUSH: “We have six co-managers today, all are minority owned banks and Microsoft has partnered with minority banks in every bond and commercial paper issuance since our Board of Directors authorized debt issuance in 2007.  These minority banks have been instrumental in making our bonds available to a broader retail investors.  In addition, Microsoft’s Treasurer, George Zinn, is a strong proponent of CDARs, that are Certificate of Deposit  investments with minority owned banks that are FDIC insured.

“Microsoft is strongly committed to supplier diversity, which includes seeking certified minority-, woman-, disabled-, and veteran-owned business enterprises in the U.S.  We made this an area of focus starting in 2006, and at that time $622 million of our domestic spending was on such enterprises. This past year this total has grown to just over $2 billion and amounted to 7.3 percent of our total spending.”

Last December, Reverend Jesse Jackson met with Microsoft CEO Satya Nadella and senior leaders, prior to presenting at Microsoft's sharehodler meeting in Washington.  On December 10, RainbowPUSH convened a special session connecting African American and Latino financial services firms with Microsoft.   Microsoft Treasurer George Zinn and Chief Diversity Officer Gwen Houston presented information on financial services opportunities with the company, and their desire to expand opportunities in this space.  

Rev. Jackson concluded, “Just last week, Apple made a major breakthrough by including, for the first time ever, minority firms in a corporate debt offering.  

We hope that other Silicon Valley technology companies will follow Microsoft and Apple’s lead and open up new business opportunities for minority firms.  It’s good business; when there is inclusion, there is growth and when there is growth, everybody wins.”

 

 

 

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USA Today

 

Microsoft latest tech to borrow big

By: Matt Krantz February 9, 2015 12:37 pm 

Microsoft (MSFT) Monday filed plans to sell a massive amount of debt, the latest in borrowing by rich tech companies.

The computing giant is negotiating with potential buyers of $7 billion in debt with maturities ranging from five to 40 years, says Richard Lane of Moody’s Investors Service. Demand is strong as the rating agency Standard & Poor’s as reaffirmed Microsoft’s pristine AAA-credit rating and the deal size could grow, says Reuters. Microsoft is one of just three companies with the perfect AAA credit rating.

Microsoft’s bond offering follows another from tech giant Apple, which sold $6.5 billion in debtlast week. These tech companies are using debt to deal with a tax problem. Both Microsoft and Apple have huge cash piles of cash sitting overseas. U.S. investors want the cash back, in the form of stock buybacks and dividends. But if these companies bring overseas cash to U.S. shores, a tax bill could be due.

So rather than bringing cash to the U.S., these companies can avail themselves of the super-low interest rates and borrow. Those borrowed funds can be used to fund share buybacks and dividends – without triggering a tax event.

Microsoft has bold plans to return cash to investors – even as a great deal is stored overseas, according to a report from Moody’s Investors Service to clients. The computer company plans to finish the rest of its $31 billion share buyback by the end of December 2016.

Microsoft is certainly not hurting for cash. The company ended 2014 with cash and investments of $102 billion – making it one of the most well-funded companies in the world. Before the current offering, Microsoft was carrying $18.2 billion in long-term debt, which is up 52% from two years ago, says S&P Capital IQ.

The trouble is only $8.1 billion is “reported to be maintained domestically,” Moody’s says. And about half of Microsoft’s expected $36 billion in cash from operations over the next year will come from foreign sources, Moody’s says.

S&P said is doesn’t plan to downgrade Microsoft due to the latest debt offering. Our ‘AAA’ corporate credit rating and stable outlook on Microsoft remain unchanged,” according to an S&P statement to investors. “The corporate credit rating incorporates our assumption that Microsoft will maintain a “minimal” financial risk profile assessment, with adjusted leverage below 0.5x.”

Moody’s, too, doesn’t expect any change to the company’s rating over the next 12 to 18 months. Much further in the future that could change if the company continues to use debt to return cash to stockholders.

Microsoft’s stock price rose 22 cents, or 0.5%, to $42.63