Nokia - Company Announcement

Nokia to issue convertible bonds of EUR 1.5 billion to Microsoft

Nokia Corporation
Stock exchange release
September 6, 2013 at 18.40 (CET+1)

Espoo, Finland - On September 3 2013, Nokia announced that, in connection with
its announcement to sell to Microsoft Corporation substantially all of its
Devices & Services business (the “Sale of the D&S Business”), Microsoft had
agreed to make available to Nokia EUR 1.5 billion of financing in the form of
three EUR 500 million tranches of convertible bonds. 

Today, Nokia announces that it has decided to draw down all of this financing
and thus Nokia will issue three tranches of senior unsecured convertible bonds,
each with a nominal value of EUR 500 million (the “Bonds”). Nokia's Board of
Directors decided today to issue the Bonds on the basis of the authorization
granted by the Annual General Meeting of Nokia held on May 7, 2013. 

Nokia intends to use the proceeds of the offering to prepay financing raised
for the acquisition of the shares in NSN which was completed in August 2013 and
for general corporate purposes. 

The key terms of the Bonds to be issued are as follows:

- The first tranche (the “2018 Bonds”) matures in 5 years and has a 1.125% per
annum coupon payable semi-annually with an initial conversion price of EUR
3.9338. 

- The second tranche (the “2019 Bonds”) matures in 6 years and has a 2.5% per
annum coupon payable semi-annually with an initial conversion price of EUR
4.0851. 

- The third tranche (the “2020 Bonds”) matures in 7 years and has a 3.625% per
annum coupon payable semi-annually with an initial conversion price of EUR
4.2364. 

If the Sale of the D&S Business is completed, the Bonds will be redeemed and
the principal amount and accrued interest netted against the Sale of the D&S
Business proceeds. 

All the Bonds are issued at par and will be redeemed at par on the closing date
of the Sale of the D&S Business. Should the Sale of the D&S Business not be
completed, the Bonds will be redeemed at par on their respective maturity
dates, unless otherwise redeemed, purchased, converted or cancelled in
accordance with their terms. 

The Bonds are expected to be issued on or about September 23, 2013.

Microsoft has agreed not to sell any of the Bonds or convert any of the Bonds
to Nokia shares prior to the closing of the Sale of the D&S business. 

Should the Sale of the D&S Business not be completed, Microsoft would have the
right to sell the 2018 Bonds immediately. Microsoft has agreed not to sell any
of the 2019 Bonds prior to the second anniversary of their issuance date and
any of the 2020 Bonds prior to the third anniversary of their issuance date. 

Microsoft has also agreed not to convert any of the 2018 Bonds and any of the
2019 Bonds into Nokia shares prior to the second anniversary of their issuance
date and for the 2020 Bonds prior to the third anniversary of their issuance
date, except in a change of control situation. Thereafter, the conversion right
continues until the date falling seven business days prior to the maturity date
of the relevant bond. If the Bonds are converted into Nokia shares by
Microsoft, Microsoft has agreed to vote according to recommendations of Nokia's
Board of Directors, save in circumstances where this would be construed as
Microsoft acting in concert with Nokia for purposes of the Finnish Securities
Markets Act. 

Nokia has the right to redeem all outstanding 2018 Bonds and 2019 Bonds after
the third anniversary of their issuance date plus 30 days if the volume
weighted average price of the Nokia shares is at least 130% of the then
prevailing conversion price for a specified period of time, and with respect to
the 2020 Bonds Nokia has a similar right after the fourth anniversary of their
issuance date plus 30 days. Nokia will also have the right to redeem each
tranche of Bonds at any time if conversion rights are exercised and/or
purchases (and corresponding cancellations) and/or redemptions are effected in
respect of 85% or more in principal amount of such tranche of Bonds. The terms
and conditions of the Bonds provide for adjustments of the then applicable
conversion price for any dividends in cash or in kind as well as customary
anti-dilution adjustments. 

Nokia will make an application to include the Bonds for trading on the Open
Market (Freiverkehr) segment of the Frankfurt Stock Exchange as soon as
reasonably practicable following the issuance date of the Bonds. 

The maximum number of shares which may be issued by Nokia upon conversion of
all the Bonds (based on the initial conversion price of each tranche) is
approximately 367.5 million, representing approximately 8.9 % of Nokia's shares
as calculated based on current amount of shares added with shares to be issued
upon conversion of all the Bonds. 

About Nokia
Nokia is a global leader in mobile communications whose products have become an
integral part of the lives of people around the world. Every day, more than 1.3
billion people use their Nokia to capture and share experiences, access
information, find their way or simply to speak to one another. Nokia's
technological and design innovations have made its brand one of the most
recognized in the world. For more information, visit
http://www.nokia.com/about-nokia. 

FORWARD-LOOKING STATEMENTS

It should be noted that Nokia and its business are exposed to various risks and
uncertainties and certain statements herein that are not historical facts are
forward-looking statements, including, without limitation, those regarding: A)
the planned sale by Nokia of substantially all of Nokia's Devices & Services
business, including Smart Devices and Mobile Phones  (referred to below as"Sale of the D&S Business") pursuant to a purchase agreement between Nokia and
Microsoft (referred to below as "Agreement"); B) the closing of the Sale of the
D&S Business; C) obtaining the shareholder approval for the Sale of the D&S
Business; D) receiving timely, or at all, necessary regulatory approvals for
the Sale of the D&S Business; E) expectations, plans or benefits related to or
caused by the Sale of the D&S Business; F) expectations, plans or benefits
related to Nokia's strategies, including plans for Nokia with respect to its
continuing business areas that will not be divested in connection with the Sale
of the D&S Business; G) expectations, plans or benefits related to changes in
leadership and operational structure; H) expectations and targets regarding our
operational priorities, financial performance or position, results of
operations and use of proceeds from the Sale of the D&S Business; and I)
statements preceded by "believe,""expect,""anticipate,""foresee,""sees,""target,""estimate,""designed,""aim", "plans,""intends,""focus,""will" or
similar expressions. These statements are based on management's best
assumptions and beliefs in light of the information currently available to it.
Because they involve risks and uncertainties, actual results may differ
materially from the results that we currently expect. Factors, including risks
and uncertainties that could cause these differences include, but are not
limited to: 1) the inability to close the Sale of the D&S Business in a timely
manner, or at all, for instance due to the inability or delays in obtaining the
shareholder approval or necessary regulatory approvals for the Sale of the D&S
Business, or the occurrence of any event, change or other circumstance that
could give rise to the termination of the Agreement; 2) the potential adverse
effect on the sales of our mobile devices, business relationships, operating
results and business generally  resulting from the announcement of the Sale of
the D&S Business or from the terms that we have agreed for the Sale of the D&S
Business; 3) any negative effect caused by us entering into the Sale of the D&S
Business, as we may forego other competitive alternatives for strategies or
partnerships that would benefit our Devices & Services business and if the Sale
of the D&S Business is not closed, we may have limited options to continue the
Devices & Services  business or enter into another transaction on terms
favorable to us, or at all; 4) our ability to effectively and smoothly
implement planned changes to our leadership and operational structure or
maintain an efficient interim governance structure and preserve or hire key
personnel; 5) any negative effect from the implementation of the Sale of the
D&S Business, which will require significant time, attention and resources of
our senior management and others within the company potentially diverting their
attention from other aspects of our business; 6) disruption and dissatisfaction
among employees caused by the plans and implementation of the Sale of the D&S
Business reducing focus and productivity in areas of our business; 7) the
amount of the costs, fees, expenses and charges related to or triggered by the
Sale of the D&S Business; 8) any impairments or charges to carrying values of
assets or liabilities related to or triggered by the Sale of the D&S Business;
9) potential adverse effect on our business, properties or operations caused by
us implementing the Sale of the D&S Business; 10) the initiation or outcome of
any legal proceedings, regulatory proceedings or enforcement matters that may
be instituted against us relating to the Sale of the D&S Business; and, as well
as the risk factors specified on pages 12-47 of Nokia's annual report on Form
20-F for the year ended December 31, 2012 under Item 3D. "Risk Factors." and
risks outlined in our most recent interim report. Other unknown or
unpredictable factors or underlying assumptions subsequently proving to be
incorrect could cause actual results to differ materially from those in the
forward-looking statements. Nokia does not undertake any obligation to publicly
update or revise forward-looking statements, whether as a result of new
information, future events or otherwise, except to the extent legally required.