Networking solutions giant Cisco has started the sale of bonds worth USD 8 billion with different maturing periods and the proceeds will be utilised, among other things, for repaying debt and acquisitions.
The bond sale by the US-based firm, the second largest investor grade technology bond sale on record after Apple's USD 17 billion offering in 2013, will be sold in seven tranches and have a maturing period between 2014 and 2015.
The company has offered bonds worth USD 850 million to mature in 2015, USD 1 billion (2017), USD 2.4 billion (2017), USD 500 million (2019), USD 1.75 billion (2019), USD 500 million (2021) and USD 1 billion (2024), it said in a filing with the US Securities and Exchange Commission yesterday.
"We expect the net proceeds of this offering to be approximately USD 7.97 billion after deducting underwriting discounts and the estimated expenses of the offering payable by us," the filing added.
On the utilisation of funds raised from the bonds sale, Cisco said: "The net proceeds from this offering will be used for general corporate purposes, including repaying USD 3.75 billion aggregate principal amount of our outstanding senior unsecured notes.
"It will consist of USD 2 billion of our 1.625 per cent Senior Notes and USD 1.25 billion of our Floating Rate Notes, each maturing on March 14, 2014 and USD 500 million of our 2.90 per cent Senior Notes maturing on November 17, 2014."
The company also plans to return capital to shareholders, pursuant to its previously-announced capital allocation strategy through the repurchase of shares of its common stock and the payment of cash dividends.
General corporate purposes may also include repurchases of common stock, repayment of debt, including the repayment of previously issued notes, acquisitions, investments, additions to working capital, capital expenditures, cash dividends and advances to or investments in our subsidiaries, it said.
"Pending these uses, we will invest the net proceeds in interest-bearing, investment-grade securities," Cisco added.
BofA Merrill Lynch, Barclays, Deutsche Bank Securities, J P Morgan, Citigroup, HSBC and Wells Fargo Securities are the joint book-running managers of the bond sale, the filing said.
BB&T Capital Markets, BNP Paribas, Credit Suisse, Goldman Sachs & Co, Morgan Stanley and RBS are co-managers in the deal, it added.
