Xerox Holdings Corporation — Form 8-K Summary
Business Context and Reporting Period
Filed March 25, 2022, reporting an event effective March 24, 2022. Xerox Holdings Corporation and Xerox Corporation entered into Amendment No. 4 to their existing credit agreement with Citibank, N.A., as administrative agent, and participating lenders.
Material Financing Changes
- Revolving credit commitments were reduced from $1.8 billion to $1.5 billion.
- During a covenant modification period beginning January 1, 2022 and ending on the earlier of June 30, 2022 or Xerox’s elected termination date, Xerox Corporation must maintain unrestricted cash of at least $500 million at the end of each fiscal quarter.
- For fiscal quarters ending during the modification period, the required leverage test changed to a maximum Net Debt for Borrowed Money to consolidated EBITDA ratio of 4.25:1.00.
- The revised net-debt leverage test replaced the previously applicable Total Debt for Borrowed Money to consolidated EBITDA ratio of 4.25:1.00.
Financial Metrics, Liquidity, and Outlook
The filing does not provide revenue, profit, cash flow, margin, operating performance, or earnings guidance. It does disclose a revised liquidity requirement of at least $500 million of unrestricted cash and a reduced revolving credit facility. No management outlook or commentary is included.
Risks, Contingencies, and Unusual Items
- The amended covenants may constrain financial flexibility during the covenant modification period.
- Failure to maintain the required unrestricted cash balance or comply with the revised leverage covenant could affect access to credit and potentially result in consequences under the credit agreement; the filing does not specify those consequences.
- The description of the amendment is qualified by, and should be read with, the complete agreement filed as Exhibit 4.1.
Investor Verification Items
- Review Exhibit 4.1 for the complete definitions of unrestricted cash, Net Debt for Borrowed Money, consolidated EBITDA, and related covenant provisions.
- Verify whether Xerox elected to end the covenant modification period before June 30, 2022.
- Check subsequent filings for compliance with the $500 million minimum cash requirement and 4.25:1.00 net-debt leverage covenant.
- Assess the impact of reducing revolving credit availability from $1.8 billion to $1.5 billion on liquidity and refinancing capacity.