Business Context and Reporting Period
Xerox Holdings Corporation and Xerox Corporation filed a Form 8-K dated August 6, 2020, reporting the completion of a senior-notes offering and the creation of related financial obligations.
Key Financial and Capital Structure Matters
- Offering: $550 million of 5.000% senior notes due 2025 and $550 million of 5.500% senior notes due 2028.
- Net proceeds: Approximately $1.087 billion after fees and expenses.
- Use of proceeds: Intended repayment at maturity of $362 million of Xerox Corporation’s 3.500% senior notes due 2020 and $376 million of its 2.750% senior notes due 2020. The remaining proceeds are intended primarily to repay the 4.500% senior notes due 2021 at or before maturity.
- Debt structure: The notes are unsecured senior obligations of Xerox Holdings Corporation and are fully and unconditionally guaranteed initially by Xerox Corporation.
- Interest and maturity: The notes bear fixed annual interest at 5.000% and 5.500%, with maturities in 2025 and 2028, respectively.
- Financial performance: The filing does not provide revenue, profit, cash flow, margin, liquidity, or operating-performance metrics.
Material Changes Versus the Prior Comparable Period
The filing does not present comparative operating or financial results. The material reported change is the addition of $1.1 billion aggregate principal amount of new senior debt, with proceeds intended to refinance existing 2020 and 2021 maturities.
Terms, Outlook, Risks, and Unusual Items
- The notes may be redeemed before the applicable one-month pre-maturity date at par plus accrued interest and an applicable make-whole premium; thereafter, they may be redeemed at par plus accrued interest.
- Upon certain change-of-control events accompanied by specified rating declines, the company must offer to repurchase the notes at 101% of principal plus accrued interest.
- The indentures contain customary limitations on liens, investments, mergers, and transfers of substantially all assets, as well as customary events of default.
- The notes were offered under Rule 144A and Regulation S and were not registered under the Securities Act.
- The filing provides no broader earnings guidance or operating outlook. Refinancing execution, interest expense, leverage, credit ratings, and compliance with debt covenants are key considerations.
Investor Verification Items
- Verify the final application of the approximately $1.087 billion in net proceeds and the timing of repayment of the 2020 and 2021 notes.
- Review the filed indentures for complete covenant, redemption, guarantee, and event-of-default provisions.
- Assess the effect of the new debt on Xerox’s total leverage, annual interest expense, maturities, and liquidity.
- Confirm the credit ratings and any subsequent guarantees provided by additional subsidiaries.