- Xerox (XRX, Financial) successfully closed a dual offering of $800 million in senior secured notes.
- The proceeds will be used to refinance existing debt and fund the acquisition of Lexmark.
- High interest rates on the new notes reflect increased borrowing costs for Xerox.
Xerox Corporation (XRX) has completed the issuance of $800 million in senior secured notes, comprising $400 million in 10.250% First Lien Notes due 2030 and another $400 million in 13.500% Second Lien Notes due 2031. The First Lien Notes will facilitate the redemption of the company's existing 5.000% Senior Notes due 2025, with $90 million already redeemed as of April 11, 2025.
The proceeds from the Second Lien Notes are designated to partially finance Xerox's acquisition of Lexmark International II, LLC, and to settle Lexmark's outstanding debt. Until the acquisition is finalized, these funds are secured in escrow, with a mandatory redemption clause if the deal is not completed by December 22, 2025.
This strategic financial maneuvering by Xerox aims to optimize its capital structure, despite the high interest rates indicative of increased borrowing costs. The company seeks to use these funds to not only streamline existing debt obligations but also to expand its business operations through the Lexmark acquisition, initially announced on December 22, 2024.
