Nokia Corporation (ADR) (NYSE:NOK) (BIT:NOK1V) (HEL:NOK1V) may be sinking more quickly than previously thought. The company said today via a press release on its website that it would begin drawing on the $2 billion worth of convertible bonds that are part of the deal with Microsoft Corporation (NASDAQ:MSFT).


There’s been speculation recently that the main reason Microsoft wants to acquire Nokia’s devices division is to save Windows Phone, either because Nokia is bankrupt (as is now beginning to sound even more like is the case) or because the company was going to switch to making Android devices.

Nokia starts drawing on Microsoft’s financing

Nokia said today that it plans to draw down all of the financing made available by Microsoft, so it will issue three tranches of senior unsecured bonds. Each of those bonds is worth €500 million. The company’s board decided to issue those bonds based on authorization which was granted at Nokia’s annual meeting this past May.

Nokia Corporation (NYSE:NOK) (BIT:NOK1V) (HEL:NOK1V) said it would use the proceeds of the bond offering to prepay financing which had been raised for the company’s acquisition of the rest of its Nokia Siemens Networks joint venture. That acquisition was completed last month. The proceeds will also be used “for general corporate purposes.”

Details on Nokia’s bond offering

The first tranche will mature in 2018 with a 1.125 percent per annum coupon payable semi-annually with a starting price of €3.9338. The second tranche matures the following year and has a 2.5 percent per annum coupon payable semi-annually with a starting conversion price of €4.0851. The third tranche matures in 2020 and has a 3.625 percent rate.

If Microsoft Corporation (NASDAQ:MSFT) does complete its planned acquisition of Nokia, then those bonds will be redeemed. If the deal does not close, then Microsoft will be able to sell the 2018 bonds right away. However, the company has agreed not to sell any of the 2019 bonds for at least two years or any of the 2020 bonds for at least three years.

The bonds are expected to be issued on our around Sept. 23.