Rhea-AI Impact
Rhea-AI Sentiment
Rhea-AI Summary
Xerox Holdings Corporation announces the pricing of $500 million Senior Notes offering to refinance existing debt and pay related expenses. The offering size was increased by $100 million, with expected closing on March 20, 2024.
Xerox Holdings Corporation’s recent pricing of $500 million in Senior Notes at an 8.875% interest rate, due in 2029, indicates a strategic financial maneuver to refinance existing debt with more favorable terms. The increase in the offering size by $100 million suggests a strong demand from investors, which could imply confidence in the company’s creditworthiness and future prospects. However, the high-interest rate compared to the notes being refinanced suggests a potentially increased cost of capital, which may affect the company’s future interest expense and net income margins.
Investors should consider the implications of this debt restructuring on the company’s balance sheet. While it could lead to improved financial flexibility in the short term, the higher interest payments associated with the new notes could impact cash flows. It is also essential to monitor the company’s future earnings reports for any changes in interest expenses and the overall impact on profitability.
The offering’s restriction to ‘qualified institutional buyers’ and non-U.S. persons outside the United States, in accordance with Rule 144A and Regulation S, is a common practice designed to streamline the issuance process while complying with the Securities Act of 1933. This limits the pool of potential investors but simplifies the regulatory burden. The absence of registration under the Securities Act or any state securities laws means these notes cannot be sold in the U.S. to the general public without an exemption, which is a typical approach for private placements.
Stakeholders should be aware that the legal framework surrounding these transactions is complex and designed to protect both the issuer and investors. The company’s adherence to these regulations suggests a cautious approach to compliance and risk management, which is a positive signal for investors looking for responsible corporate governance.
The high yield of 8.875% on the new Senior Notes reflects current market conditions, where rising interest rates and economic uncertainty have pushed corporate borrowing costs higher. This yield is particularly notable when contrasted with the lower rates of the notes being refinanced. For Xerox, this move could be seen as proactive in locking in long-term financing before potential further rate hikes. Market trends should be analyzed to understand the broader implications of such high-yield offerings and investor appetite for corporate debt in this interest rate environment.
Additionally, the success of this offering could set a precedent for similar companies considering refinancing options. The market’s response to Xerox’s offering may influence other corporations’ strategies, potentially leading to a wave of refinancing activities in the sector. Monitoring peer responses and market reactions will be crucial for understanding the broader impact on the industry.
NORWALK, Conn.–(BUSINESS WIRE)– Xerox Holdings Corporation (NASDAQ: XRX) (the “Company”) announced today that it has priced an offering of $500 million aggregate principal amount of 8.875% Senior Notes due 2029 (“Notes”). The Notes will be issued at a price of 100% of their principal amount. The size of the offering was increased by $100 million subsequent to the initial announcement of the offering.
The Company intends to use the net proceeds from the sale of the Notes to (i) refinance all of its outstanding 3.800% Senior Notes due 2024 (“2024 Notes”) and a portion of its 5.000% Senior Notes due 2025 (“2025 Notes”), (ii) repay, repurchase or redeem a portion of its other outstanding indebtedness and (iii) to pay related fees and expenses.
The sale of the Notes is expected to close on March 20, 2024, subject to the satisfaction or waiver of customary closing conditions.
The Notes and the related guarantees are being offered and sold to persons reasonably believed to be “qualified institutional buyers” pursuant to Rule 144A under the Securities Act of 1933 (as amended, the “Securities Act”) and to non-U.S. persons outside the United States pursuant to Regulation S under the Securities Act. The Notes and the related guarantees have not been registered for sale under the Securities Act or any state securities laws and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements of the Securities Act and applicable state laws.
This press release shall not constitute an offer to sell, or a solicitation of an offer to buy, the Notes, the related guarantees or any other security, and shall not constitute an offer, solicitation or sale of any securities in any state or jurisdiction in which, or to any persons to whom, such offering, solicitation or sale would be unlawful. In addition, this press release shall not constitute an offer to purchase or a solicitation of an offer to purchase the 2024 Notes or the 2025 Notes. Any tender offer will be made solely pursuant to an offer to purchase to the holders of the 2024 Notes and the 2025 Notes.
About Xerox Holdings Corporation (NASDAQ: XRX)
For more than 100 years, Xerox has continually redefined the workplace experience. Harnessing our leadership position in office and production print technology, we’ve expanded into software and services to sustainably power the hybrid workplace of today and tomorrow. Today, Xerox is continuing its legacy of innovation to deliver client-centric and digitally-driven technology solutions and meet the needs of today’s global, distributed workforce. From the office to industrial environments, our differentiated business and technology offerings and financial services are essential workplace technology solutions that drive success for our clients. At Xerox, we make work, work.
Forward-Looking Statements
This release and other written or oral statements made from time to time by management contain “forward looking statements” as defined in the Private Securities Litigation Reform Act of 1995. The words “anticipate”, “believe”, “estimate”, “expect”, “intend”, “will”, “should”, “targeting”, “projecting”, “driving” and similar expressions, as they relate to us, our performance and/or our technology, are intended to identify forward-looking statements. These statements reflect management’s current beliefs, assumptions and expectations and are subject to a number of factors that may cause actual results to differ materially. Such factors include but are not limited to: risks and uncertainties related to the completion of the offering of the Notes on the anticipated terms or at all, applicable market conditions, the satisfaction of customary closing conditions related to the offering, global macroeconomic conditions, including inflation, slower growth or recession, delays or disruptions in the global supply chain, higher interest rates, and wars and other conflicts, including the current conflict between Russia and Ukraine; our ability to succeed in a competitive environment, including by developing new products and service offerings and preserving our existing products and market share as well as repositioning our business in the face of customer preference, technological, and other change, such as evolving return-to-office and hybrid working trends; failure of our customers, vendors, and logistics partners to perform their contractual obligations to us; our ability to attract, train, and retain key personnel; execution risks around our Reinvention; the risk of breaches of our security systems due to cyber, malware, or other intentional attacks that could expose us to liability, litigation, regulatory action or damage our reputation; our ability to obtain adequate pricing for our products and services and to maintain and improve our cost structure; changes in economic and political conditions, trade protection measures, licensing requirements, and tax laws in the United States and in the foreign countries in which we do business; the risk that multi-year contracts with governmental entities could be terminated prior to the end of the contract term and that civil or criminal penalties and administrative sanctions could be imposed on us if we fail to comply with the terms of such contracts and applicable law; interest rates, cost of borrowing, and access to credit markets; risks related to our indebtedness; the imposition of new or incremental trade protection measures such as tariffs and import or export restrictions; funding requirements associated with our employee pension and retiree health benefit plans; changes in foreign currency exchange rates; the risk that our operations and products may not comply with applicable worldwide regulatory requirements, particularly environmental regulations and directives and anticorruption laws; the outcome of litigation and regulatory proceedings to which we may be a party; laws, regulations, international agreements and other initiatives to limit greenhouse gas emissions or relating to climate change, as well as the physical effects of climate change; and other factors as set forth from time to time in the Company’s Securities and Exchange Commission filings, including the Company’s Annual Report on Form 10-K for the year ended December 31, 2023.
The Company intends these forward-looking statements to speak only as of the date of this release and does not undertake to update or revise them as more information becomes available, except as required by law.
Xerox® is a trademark of Xerox in the United States and/or other countries.
View source version on businesswire.com: https://www.businesswire.com/news/home/20240306146166/en/
Media Contact:
Justin Capella, Xerox, +1-203-258-6535, Justin.Capella@xerox.com
Investor Contact:
David Beckel, Xerox, +1-203-849-2318, David.Beckel@xerox.com
Source: Xerox Holdings Corporation
The purpose is to refinance existing debt, including 3.800% Senior Notes due 2024 and a portion of 5.000% Senior Notes due 2025, repay other outstanding indebtedness, and pay related fees and expenses.
The Notes offering is expected to close on March 20, 2024, subject to customary closing conditions.
The Notes and related guarantees are being offered to qualified institutional buyers under Rule 144A and non-U.S. persons outside the United States under Regulation S.
The Notes and related guarantees have not been registered for sale under the Securities Act or state securities laws in the U.S. and may only be offered or sold with registration or an applicable exemption.
