Subsequent Events

9 Months Ended

Sep. 30, 2021

Subsequent Events

Subsequent Events

14. Subsequent Events:

On October 14, 2021, Kyndryl’s Form 10 was declared effective by the SEC. On November 2, 2021, in connection with the Separation, the Company entered into several agreements with IBM that govern the relationship of the parties following the Separation. On November 3, 2021, the Separation was completed through IBM’s distribution of 80.1% of outstanding shares of Kyndryl common stock to holders of IBM common stock as of the close of business on the record date of October 25, 2021. As a result of the distribution, IBM stockholders of record received one share of Kyndryl’s common stock for every five shares of IBM common stock. After this distribution, IBM continued to own 19.9% of the shares of Kyndryl common stock. On November 4, 2021, Kyndryl began trading as an independent, publicly traded company under the stock symbol “KD” on the New York Stock Exchange.

In October 2021, in preparation for the Separation, Kyndryl completed the offering of $2.4 billion in aggregate principal amount of senior unsecured fixed-rate notes (the “Notes”) as follows: $700 million aggregate principal amount of 2.05% Senior Notes due 2026, $500 million aggregate principal amount of 2.70% Senior Notes due 2028, $650 million aggregate principal amount of 3.15% Senior Notes due 2031 and $550 million aggregate principal amount of 4.10% Senior Notes due 2041. In addition, Kyndryl entered into a $500 million three-year variable rate term loan (the “Term Loan”). Approximately $963 million of the net proceeds of the Notes and the Term Loan was transferred to IBM in conjunction with the Separation. In October 2021, Kyndryl also entered into a $3.2 billion five-year multi-currency revolving credit facility (the “Credit Facility”) for its future liquidity needs. The Credit Facility became available to the Company upon completion of the Separation. The Notes and the Term Loan were initially guaranteed by IBM. Following the completion of the Separation, the guarantee was released, and the Notes and the Term Loan are no longer obligations of IBM.

In October 2021, the Company entered into a factoring arrangement with an unaffiliated financial institution specifically designed to factor trade receivables with certain customers that have extended terms. Under this factoring arrangement, from time to time, we sell these certain customers’ trade receivables at a discount on a non-recourse basis. Pursuant to this arrangement, we may sell at any one time, on a revolving basis, up to $1.1 billion of our trade receivables. These transactions are accounted for as sales, and cash proceeds are included in cash provided by operating activities in the Combined Statement of Cash Flows.