Xerox said it intends to use the first lien notes proceeds, together with cash on hand, to redeem Xerox’s 5% senior notes due 2025 in full on or prior to their maturity and to pay fees and expenses, including redemption premiums and accrued interest, in connection with its Lexmark acquisition – announced in December – and the related transactions, including redemption premiums and accrued interest in connection with the related transactions.

Xerox redeemed an aggregate principal amount of $90m of the 2025 notes on Friday (11 April), 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 $95m aggregate principal amount of borrowings under Xerox’s first lien senior secured term loan credit facility.

Xerox added that it 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 Lexmark acquisition – including “the repayment of substantially all of Lexmark’s outstanding debt”, and pay fees and expenses in connection with the offering, the Lexmark acquisition, and the related transactions.

The gross proceeds of the second lien notes will be deposited into an escrow account until the acquisition closes, with a special mandatory redemption provision if the deal is not completed by 22 December 2025.

Xerox’s share price closed at $3.96 on Friday (52-week high: $17.18, low: $3.44).