SEC Form 8-K Summary
Company: Xerox Holdings Corporation and Xerox Corporation
Filing type: Form 8-K
Reported event date: May 17, 2023; the new Credit Agreement was entered into on May 22, 2023, and the filing was signed May 23, 2023.
Business Context and Reporting Period
The filing reports changes to Xerox’s credit arrangements. It does not provide operating results or a financial reporting period.
Financing and Liquidity
- Xerox Corporation entered into a senior secured, asset-based revolving credit facility with total commitments of up to $300.0 million.
- Availability is limited to the lesser of $300.0 million and a borrowing base calculated using the working capital of the loan parties.
- The facility includes an uncommitted accordion feature permitting up to an additional $250.0 million, subject to additional lender commitments.
- A letter-of-credit subfacility of up to $100.0 million is included.
- The facility matures on May 22, 2028, with no scheduled principal payments before maturity.
- Borrowings are guaranteed by Xerox Holdings Corporation and certain Canadian and U.K. subsidiaries and secured by substantially all working-capital assets of the relevant loan parties.
- Interest is based on either an adjusted base rate or Term SOFR plus applicable margins. Through the quarter ending December 31, 2023, margins are 1.0% for base-rate loans and 2.0% for Term SOFR loans; thereafter, margins vary based on average excess availability.
- The facility includes a springing fixed-charge coverage ratio tested when excess availability falls below the greater of $22.5 million or 10% of the line cap.
Material Changes Versus the Prior Arrangement
- On May 17, 2023, Xerox terminated a prior $250.0 million credit agreement dated July 7, 2022.
- The prior facility had never been drawn and all commitments were terminated.
- The new facility increases stated revolving commitments to $300.0 million and adds a potential $250.0 million accordion, but actual availability remains subject to the borrowing base and lender commitments.
Outlook, Risks, and Unusual Items
- The ABL contains customary negative covenants concerning dividends, investments, indebtedness, and other matters.
- An event of default may accelerate all outstanding principal, accrued interest, and other amounts, subject in some cases to applicable cure periods.
- The filing does not state the amount drawn, current availability, unused fees, or the applicable borrowing base.
- The filing does not provide revenue, profit, cash flow, margins, total debt, cash balances, or management guidance.
Investor Verification Items
- Confirm the actual borrowing base, excess availability, outstanding borrowings, letters of credit, and unused capacity under the ABL.
- Review the complete Credit Agreement, including covenant definitions, pricing grids, fees, events of default, and collateral provisions.
- Assess the impact of replacing the undrawn $250.0 million facility on Xerox’s liquidity and secured debt structure.
- Verify the date discrepancy between the reported earliest event date of May 17, the Credit Agreement date of May 22, and the filing signature date of May 23, 2023.