The manufacturer yesterday (25 March) announced the offering of $400m (£310m) aggregate principal amount of senior secured first lien notes due 2030, to be issued by Xerox Corporation and guaranteed by Xerox Holdings Corporation and certain of Xerox’s domestic and foreign subsidiaries.

The company also announced a $400m aggregate principal amount of senior secured second lien notes due 2031 to be issued by Xerox Issuer Corporation, a wholly-owned subsidiary of Xerox Corporation.

Xerox Corporation said it intends to use the net proceeds from the offering of the first lien notes, together with cash on hand, to finance the redemption of $90m of Xerox’s 5% senior notes due in 2025, “including redemption premiums and accrued interest, on or about the issue date of the first lien notes, with the balance to be redeemed on or prior to maturity, and to pay fees and expenses in connection with the offering”.

Pending application of the proceeds to redeem the remaining 2025 notes, Xerox said it will use the proceeds of the first lien notes for general corporate purposes, including the repayment of $95m 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 fund a portion of the purchase price for the proposed acquisition of all of the issued and outstanding equity securities of Lexmark International, as announced in December.

Also; the repayment of substantially all of Lexmark’s outstanding debt (together with accrued interest and any applicable expenses, fees or premiums) and 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,” Xerox stated.

“Following the release of the proceeds of the second lien notes from the escrow account, Xerox Corporation will assume the obligations of the Escrow issuer under the indenture governing the second lien notes and the second lien notes will be guaranteed by certain of Xerox’s domestic and foreign subsidiaries.” 

Xerox’s share price was down by 4.01% to $5.26 at yesterday’s close (52-week high: $18.18, low: $5.19).