Xerox Corporation on Friday announced the closing of its offering of (i) $400,000,000 in aggregate principal amount of 10.250% Senior Secured First Lien Notes due 2030 (the “First Lien Notes”) issued by Xerox Corporation and guaranteed by Xerox Holdings Corporation (“Xerox” and, together with Xerox Corporation, the “Company”) and certain of Xerox’s domestic and foreign subsidiaries and (ii) $400,000,000 in aggregate principal amount of 13.500% Senior Secured Second Lien Notes due 2031 (the “Second Lien Notes” and, together with the First Lien Notes, the “Notes”) issued by Xerox Issuer Corporation (the “Escrow Issuer”), a wholly-owned subsidiary of Xerox Corporation 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.
Xerox Corporation intends to use the net proceeds from the offering of the First Lien Notes, together with cash on hand, to redeem Xerox’s 5.000% Senior Notes due 2025 (“2025 Notes”) in full on or prior to their maturity and to pay fees and expenses, including redemption premiums and accrued interest, in connection with the offering, the Lexmark Acquisition (as defined below) and the related transactions, including redemption premiums and accrued interest in connection with the related transactions. Xerox redeemed an aggregate principal amount of $90 million of the 2025 Notes on April 11, 2025, with the balance to be redeemed on or prior to maturity. Pending the application of the proceeds of the First Lien Notes to redeem the remaining 2025 Notes, Xerox will use the proceeds of the First Lien Notes for general corporate purposes, including the repayment of $95 million aggregate principal amount of borrowings under Xerox Corporation’s first lien senior secured term loan credit facility.
Xerox Corporation intends to use the net proceeds from the offering of the Second Lien Notes to (i) fund a portion of the purchase price for the proposed acquisition (the “Lexmark Acquisition”) of all of the issued and outstanding equity securities of Lexmark International II, LLC (“Lexmark”), as previously announced on December 22, 2024 and the repayment of substantially all of Lexmark’s outstanding debt (together with accrued interest and any applicable expenses, fees or premiums) and (ii) pay fees and expenses in connection with the offering, the Lexmark Acquisition and the related transactions.
Pending consummation of the Lexmark Acquisition, concurrently with the issuance of the Second Lien Notes, the gross proceeds of the Second Lien Notes will be deposited into an escrow account for the benefit of the holders of the Second Lien Notes until such date that certain escrow release conditions, including the consummation of the Lexmark Acquisition, have been satisfied. If the Lexmark Acquisition is not consummated on or prior to December 22, 2025 (subject to extension) or upon the occurrence of certain other events, the Second Lien Notes will be subject to a special mandatory redemption at a price equal to 100% of the aggregate issue price of the Second Lien Notes, plus accrued and unpaid interest, if any, from, and including, the most recent interest payment date, or April 11, 2025, if no interest has been paid, but excluding, the special mandatory redemption date.
Upon the consummation of the Lexmark Acquisition, subject to certain escrow release conditions, the escrowed proceeds of the Second Lien Notes will be released (the “Escrow Release”) and the Escrow Issuer will be merged with and into Xerox Corporation. Xerox Corporation, Xerox and certain of Xerox’s domestic and foreign subsidiaries that guarantee the First Lien Notes will enter into one or more supplemental indentures to the Second Lien Indenture to provide for the assumption by Xerox Corporation of the obligations of the Escrow Issuer as issuer of the Second Lien Notes and for the guarantees of the Second Lien Notes by Xerox and such subsidiaries.
