KKR Invests $700M in Sun

SANTA CLARA, Calif. -- Sun Microsystems, Inc. (Nasdaq: SUNW - News) today announced a $700 million private placement transaction with KKR Private Equity Investors, L.P. (Euronext Amsterdam: KPE), the publicly traded fund of Kohlberg Kravis Roberts & Co. ("KKR"), one of the oldest and most experienced private equity firms. The investment will be in the form of $350 million of convertible senior notes due in 2012, and $350 million of convertible senior notes due in 2014. Closing of the investment is scheduled for January 26, 2007, and is subject to meeting customary closing conditions. A nominee of KKR will be presented for appointment to the Sun Microsystems Board of Directors upon or shortly following the close of this transaction.

"We are excited to have the support of one of the world's premiere private equity firms. KKR has a stellar track record of creating value for shareholders, and bringing insight and opportunity to the companies in which it invests. This investment is an important validation of our strategy and competitive assets, and reflects endorsements from key customers, along with improving financial performance and market share gains," said Jonathan Schwartz, CEO of Sun Microsystems. "Sun is clearly becoming a vendor of choice in the race to build out the Internet's global infrastructure -- and we intend to use proceeds from this placement to pursue strategic opportunities for growth. We're looking forward to working with KKR to leverage its expertise, assets, global reach and relationships."

Sun Microsystems Inc.