IBM Announces Debt Exchange Offers

  IBM Announces Debt Exchange Offers

Business Wire

ARMONK, N.Y. -- May 21, 2012

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 (CUSIP
No. 459200 AP 6) (the “7.125 percent notes”), any and all of its 8.000 percent
notes due 2038 (CUSIP No. 459200 GL 9) (the “8.000 percent notes”) and up to
$800,000,000 aggregate principal amount of its 5.600 percent notes due 2039
(CUSIP No. 459200 GS 4) (the “5.600 percent notes” and together with the 7.125
percent notes and the 8.000 percent notes, the “old notes”) for a new series
of 4.000 percent notes due 2042 (the “new notes”) and cash in the amounts
described below. To encourage holders of the 8.000 percent notes and 5.600
percent notes to tender early, IBM is offering an early exchange premium to
holders who validly tender such notes at or before 5:00 p.m. EST, on Monday,
June 4, 2012 (the “early exchange date”). The exchange offers expire at 12:00
midnight EST, on Monday, June 18, 2012 (the “expiration date”). Holders of old
notes may validly withdraw tenders of old notes at or before 5:00 p.m. EST, on
Monday, June 4, 2012 (the “withdrawal date”). IBM is 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 May 21, 2012 (the “exchange circular”).

The new notes will mature on June 20, 2042 and will bear interest from the
settlement date, at a rate per annum of 4.000 percent. The new notes will be
unsecured senior obligations of IBM and will rank equally with all of IBM’s
other unsecured senior indebtedness.

                        Principal                                   Early          
Old        Maturity     Amount             Early Exchange           Exchange        Exchange
Notes      Date         Outstanding        Consideration^(1)(2)     Premium^(1)     Consideration^(1)
                                                                                    $1,369.69
7.125%     December                                                                 principal amount
Notes      1, 2096      $322,088,000       N/A                      N/A             of New Notes and
                                                                                    a cash amount of
                                                                                    $200.00
                                                                                     
                                                                    $40             $1,654.80
8.000%     October      $186,670,000       $1,694.80 principal      principal       principal amount
Notes      15, 2038                        amount of New Notes      amount of       of New Notes
                                                                    New Notes
                                                                                     
                                           $1,155.07 principal      $40             $1,115.07
5.600%     November                        amount of New Notes      principal       principal amount
Notes      30, 2039     $1,545,095,000     and a cash amount of     amount of       of New Notes and
                                           $150.00                  New Notes       a cash amount of
                                                                                    $150.00
                                                                                     

^(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 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
withdrawal date, the expiration date or any related dates for any of the
exchange offers.

IBM expects that holders who validly tender their old notes and do not validly
withdraw them will receive their new notes and any cash payments on Wednesday,
June 20, 2012.

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. 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 (212) 430-3774 (bankers and brokers only) or toll free
at (866) 389-1500.

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 within the meaning of the Private
Securities Litigation Reform Act of 1995. Forward-looking statements are based
on our current assumptions regarding future business and financial
performance. 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 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; cybersecurity and data
privacy considerations; fluctuations in financial results 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; our ability to
attract and retain key personnel and our reliance on critical skills; impacts
of relationships with critical suppliers and business with government clients;
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 U.S. Securities and Exchange Commission (SEC) or in
materials incorporated therein by reference. Any forward-looking statement in
this press release or the exchange circular speaks only as of the date on
which it is made. We assume no obligation to update or revise any
forward-looking statements.

Contact:

IBM
Doug Shelton, 914-499-6533
doshelton@us.ibm.com