Xerox Holdings Corporation Announces Closing of Senior Notes Offering

Rhea-AI Summary

Xerox Holdings (XRX) closes a $500 million private placement of 8.875% Senior Notes due 2029 to refinance existing debt and for general corporate purposes.

Financial Analyst

Xerox Holdings Corporation's recent closure of a $500 million senior notes offering at an 8.875% interest rate reflects a strategic financial move aimed at restructuring its debt profile. This high-interest rate, significantly above current corporate bond rates for companies with stable credit ratings, suggests a market perception of increased risk associated with Xerox's debt. Investors should note that the proceeds are earmarked for refinancing existing obligations, which may improve the company's debt maturity schedule and potentially alleviate short-term liquidity pressures.

However, the decision to refinance at a higher rate could indicate that the company is facing challenges in generating cash flow or that its creditworthiness has been downgraded. The impact of this debt restructuring on Xerox's financial health will depend on the balance between the interest savings from retiring the 2024 and 2025 notes and the additional interest burden due to the higher rate of the new issuance. Stakeholders should monitor the company's future earnings reports for improvements in interest coverage ratios and overall debt levels.

Debt Market Analyst

The issuance of senior notes by Xerox Holdings Corporation in a private placement suggests a targeted approach to debt financing, avoiding the public markets which could have demanded even higher yields or shown tepid interest. The choice of a private placement typically allows for faster execution and potentially more favorable terms from institutional investors who have a better understanding of the company's risk profile.

It is also noteworthy that these notes are unsecured, placing them lower in the hierarchy of claims compared to secured debt in the event of a default. This placement, therefore, signals confidence on the part of the investors in Xerox's ability to meet its obligations. The use of proceeds to manage other outstanding indebtedness is a common strategy to manage the debt portfolio actively, but it will be critical to observe how this reshuffling impacts the overall cost of capital for Xerox and whether it aligns with the company's long-term strategic financial planning.

NORWALK, Conn.--(BUSINESS WIRE)-- Xerox Holdings Corporation (NASDAQ: XRX) (the “Company”) announced today the closing of its $500,000,000 aggregate principal amount of 8.875% Senior Notes due 2029 (the “Notes”) in a private placement to persons reasonably believed to be qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended (the “Act”) and non-U.S. persons outside the United States pursuant to Regulation S under the Act.

The Company intends to use the net proceeds from this offering, together with the net proceeds from the Company’s previously announced offering of its 3.750% Convertible Senior Notes due 2030, (i) to refinance all of its outstanding 3.800% Senior Notes due 2024 (“2024 Notes”) and $362,000,000 of its 5.000% Senior Notes due 2025 (“2025 Notes”), (ii) to repay, repurchase or redeem a portion of its other outstanding indebtedness and (iii) to pay related fees and expenses.

The Notes and the related guarantees are senior, unsecured obligations of the Company, and interest is payable semi-annually in arrears.

This press release shall not constitute an offer to sell, or a solicitation of an offer to buy, the Notes, the related guarantees or any other security, and shall not constitute an offer, solicitation or sale of any securities in any state or jurisdiction in which, or to any persons to whom, such offering, solicitation or sale would be unlawful. In addition, this press release shall not constitute an offer to purchase or a solicitation of an offer to purchase the 2024 Notes or the 2025 Notes. Any tender offer will be made solely pursuant to an offer to purchase to the holders of the 2024 Notes and the 2025 Notes.

About Xerox Holdings Corporation (NASDAQ: XRX)
For more than 100 years, Xerox has continually redefined the workplace experience. Harnessing our leadership position in office and production print technology, we’ve expanded into software and services to sustainably power the hybrid workplace of today and tomorrow. Today, Xerox is continuing its legacy of innovation to deliver client-centric and digitally-driven technology solutions and meet the needs of today’s global, distributed workforce. From the office to industrial environments, our differentiated business and technology offerings and financial services are essential workplace technology solutions that drive success for our clients. At Xerox, we make work, work.

Forward-Looking Statements

This release and other written or oral statements made from time to time by management contain “forward looking statements” as defined in the Private Securities Litigation Reform Act of 1995. The words “anticipate”, “believe”, “estimate”, “expect”, “intend”, “will”, “should”, “targeting”, “projecting”, “driving” and similar expressions, as they relate to us, our performance and/or our technology, are intended to identify forward-looking statements. These statements reflect management’s current beliefs, assumptions and expectations and are subject to a number of factors that may cause actual results to differ materially. Such factors include but are not limited to: global macroeconomic conditions, including inflation, slower growth or recession, delays or disruptions in the global supply chain, higher interest rates, and wars and other conflicts, including the current conflict between Russia and Ukraine; our ability to succeed in a competitive environment, including by developing new products and service offerings and preserving our existing products and market share as well as repositioning our business in the face of customer preference, technological, and other change, such as evolving return-to-office and hybrid working trends; failure of our customers, vendors, and logistics partners to perform their contractual obligations to us; our ability to attract, train, and retain key personnel; execution risks around our Reinvention; the risk of breaches of our security systems due to cyber, malware, or other intentional attacks that could expose us to liability, litigation, regulatory action or damage our reputation; our ability to obtain adequate pricing for our products and services and to maintain and improve our cost structure; changes in economic and political conditions, trade protection measures, licensing requirements, and tax laws in the United States and in the foreign countries in which we do business; the risk that multi-year contracts with governmental entities could be terminated prior to the end of the contract term and that civil or criminal penalties and administrative sanctions could be imposed on us if we fail to comply with the terms of such contracts and applicable law; interest rates, cost of borrowing, and access to credit markets; risks related to our indebtedness; the imposition of new or incremental trade protection measures such as tariffs and import or export restrictions; funding requirements associated with our employee pension and retiree health benefit plans; changes in foreign currency exchange rates; the risk that our operations and products may not comply with applicable worldwide regulatory requirements, particularly environmental regulations and directives and anticorruption laws; the outcome of litigation and regulatory proceedings to which we may be a party; laws, regulations, international agreements and other initiatives to limit greenhouse gas emissions or relating to climate change, as well as the physical effects of climate change; and other factors as set forth from time to time in the Company’s Securities and Exchange Commission filings, including the Company’s Annual Report on Form 10-K for the year ended December 31, 2023.

The Company intends these forward-looking statements to speak only as of the date of this release and does not undertake to update or revise them as more information becomes available, except as required by law.

Xerox® is a trademark of Xerox in the United States and/or other countries.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240320201557/en/

Media:

Justin Capella, Xerox, +1-203-258-6535, Justin.Capella@xerox.com

Investor:

David Beckel, Xerox, +1-203-849-2318, David.Beckel@xerox.com

Source: Xerox Holdings Corporation

FAQ

What is the ticker symbol of Xerox Holdings ?

The ticker symbol of Xerox Holdings is XRX.

What type of notes did Xerox Holdings issue in the private placement?

Xerox Holdings issued 8.875% Senior Notes due 2029 in the private placement.

What is the purpose of the proceeds from the offering?

The net proceeds from the offering will be used to refinance existing debt, repay other outstanding indebtedness, and pay related fees and expenses.

What are the terms of the Notes issued by Xerox Holdings ?

The Notes and related guarantees are senior, unsecured obligations of the Company, with interest payable semi-annually in arrears.

Under which regulations was the private placement conducted?

The private placement was conducted pursuant to Rule 144A under the Securities Act of 1933 and Regulation S under the Act.

Does the press release constitute an offer to sell the Notes?

No, the press release states that it does not constitute an offer to sell the Notes or any other security.

What will Xerox Holdings do with the proceeds from the offering?

Xerox Holdings plans to use the proceeds to refinance existing debt, repay other indebtedness, and pay related fees and expenses.