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December 1, 2003
Issuance of Euro Yen Zero Coupon Convertible Bonds due 2008
-Toward the Implementation of Growth Strategy of Transformation 60-
At the Executive Board held today,
Sony Corporation ("Sony") has decided the issuance of the
Euro Yen Zero Coupon Convertible Bonds due 2008 (bonds with
stock acquisition rights, tenkanshasaigata shinkabu yoyakuken-tsuki
shasai or the "Bonds") in the maximum principal amount
of ¥250 billion (including those in the maximum amount
of ¥30 billion to be issued upon exercise of the Greenshoe
Option) with a contingent conversion feature.
- Purpose of Financing
- On October 28, 2003, Sony announced "Transformation
60" ("TR60"), a series of fundamental reforms across
the Sony Group, consisting of two pillars; growth strategy
through convergence of the Group's resources and technology;
and a second phase of structural reforms aimed at enhancing
the Group's operational profit structure. This financing
is intended to provide strong support from a financial
strategy perspective for the TR60, where growth strategy
and structural reforms are simultaneously pursued, and
should enable implementation of focused investments
in growth areas.
- Use of Proceeds and Objective
- The proceeds will be applied primarily to make capital
investment for growth in semiconductors and key devices,
in order to accelerate convergence strategies in Sony's
Home Electronics (including Game) and Mobile Electronics.
Specifically, the proceeds will be allocated to finance
investments for the development and manufacturing of
semiconductors such as CELL, a highly-advanced processor
that will be embedded in a broad range of next-generation
digital consumer electronics products, and key devices
including display devices.
-
Zero coupon financing allows to support forthcoming
investments and structural reform. At the same time,
by targeting a conversion price with a high premium,
that exceeds market value (with a premium of more than
45 percent) and by further adding a contingent conversion
feature (*), the Bonds are structured to minimize potential
dilution of earnings until the TR60 has generated sufficient
returns.
Improved profitability through the TR60 could lead to
the conversion of the Bonds, which will further strengthen
our equity position and provide increased opportunity
for further investments for growth.
*Contingent conversion feature: This condition limits investors to exercise the conversion rights unless the share price is above a certain level of the conversion price for a certain period of time or longer. In this case, 1) in the initial 4 year period, if the share price for any 20 trading days in a period of 30 consecutive trading days in the previous quarter is more than 110 percent of the conversion price, 2) in the final year, at any time after the share price is more than 110 percent of the conversion price for at least one trading day, bondholders may exercise the stock acquisition rights. Dilution will not be recognized under US GAAP until the conditions are met for exercising the stock acquisition rights.
| Note: This press release
is intended as general information regarding Sony
Corporation's issuance of convertible bonds and shall
not be considered an offering of securities. This
press release shall not be construed as an offering
of securities in any region including Japan, the United
States or Canada. The securities may not be offered
or sold in the United States absent registration or
an applicable exemption under the Securities Act of
1933. In the event of an offering of securities in
the United States, a prospectus in English prepared
in accordance with the Securities Act of 1933 will
be used. This transaction does not involve any public
offering of securities in the United States. Stabilization/FSA
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