Apple Inc. (NASDAQ:AAPL) revealed Tuesday in an SEC filing that it is planning to fix rate bonds maturing in 2016, 2018, 2023 and 2043, and floating rate notes that will mature in 2016 and 2018. The iPhone maker will use the proceeds to finance its plan to return $100 billion to shareholders by 2015. Of that, the company will spend $60 billion on a share buyback program. The remaining amount will be returned through dividends. Last week, Apple Inc. (NASDAQ:AAPL) increased the quarterly dividend by 15 percent to $3.05 per share.
Apple Inc. (AAPL) Bonds Deal
Apple Inc. (NASDAQ:AAPL) has started selling bonds. Deutsche Bank AG (ETR:DBK) (FRA:DBK) (NYSE:DB) and Goldman Sachs Group, Inc.(NYSE:GS) are running the deal. Investors told the Financial Times that the iPhone maker held a series of meetings with large shareholders on Monday to discuss the deal. Apple Inc. (NASDAQ:AAPL) could raise as much as $15 billion in debts.
Taking advantage of buoyant credit markets, the Cupertino, Calif.-based company is set to borrow at ultra-cheap rates. The three-year fixed rate bonds are set to be priced at Treasuries +35 basis points, five-year bonds at Treasuries +55 basis points, and 10-year bonds at Treasuries +95 basis points. The three year floating rate notes will be used at Libor +20 basis points, and five-year at Libor +40 basis points.
It will be one of the largest corporate bonds of all time. The biggest one was from Roche Holding for $16.5 billion in 2009, followed by $16.4 billion deal of France Telecom in 2001. Apple Inc. (NASDAQ:AAPL) said in it’s SEC filing that it will be using the proceeds for general corporate purposes including share repurchase, capital expenditure, dividend payment and to fund the working capital.
Apple Inc. (AAPL)’s Cash Pile:
Apple Inc. (NASDAQ:AAPL) is sitting on about $145 billion cash pile, but only $45 billion of that is available in the United States. The remaining funds lie in foreign banks. So, the company will have to raise about $60 billion to fund the plan over the next three years.
Apple Inc. (NASDAQ:AAPL)’s balance sheet has absolutely zero debt. Earlier, the company had sold $300 million in corporate bonds at 6.5 percent in 1994 when it was known as Apple Computer Inc. The company paid off that debt by 2004. The cash return is aimed to woo shareholders who are frustrated by its falling stock prices. Tim Cook is trying hard to assure them that Apple Inc. (NASDAQ:AAPL) hasn’t lost its magic touch.
Apple Inc. (NASDAQ:AAPL) shares were up 2.99 percent to $442.98 per share at 1:03 PM EDT.