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Xerox and GE Capital Announce U.K. and Canadian Financings

Tuesday, November 20, 2001

Press release from the issuing company

STAMFORD, Conn.--Nov. 19, 2001-- Building on their global relationship, Xerox Corporation and GE Capital announced today three major initiatives that will improve Xerox's liquidity while providing GE Capital with growth opportunities in vendor financing through Xerox's customer base. Similar to an agreement developed between the two companies for U.S. customers, Xerox and GE Capital have developed a framework for the Canadian division of GE Capital's Vendor Financial Services to become the primary source of equipment financing for Xerox customers in Canada. Upon completion of this transaction, Xerox will transition its Canadian customer administration operations into a separate Canadian venture that will be jointly supervised but owned and managed by GE Capital Vendor Financial Services. The companies agreed to the principal terms of a financing arrangement under which GE Capital Canada will provide Xerox with about $350 million, secured by portions of Xerox's lease receivables in Canada. The framework arrangement and financing announced today are subject to Canadian regulatory approval, negotiation of definitive agreements and satisfaction of closing conditions, including completion of due diligence. GE Capital and Xerox also completed an agreement for GE Capital's European Equipment Finance business to provide Xerox with approximately $450 million. This financing is secured by Xerox's lease receivables in the United Kingdom, as was the funding GE Capital provided Xerox earlier this year, which has been substantially repaid. It is expected that Xerox will receive the $450 million this week. The U.K. financing amortizes over a period that extends into 2003. In related news, the companies said that the closing on the initial funding of the U.S. financing agreement announced in September is expected this week. When completed, Xerox will receive approximately $825 million from GE Capital, secured by portions of Xerox's U.S. lease receivables. GE Capital will provide Xerox with additional financing next month and in February 2002. The amounts will be determined primarily by equipment sales in the fourth quarter. In total, these financing arrangements are expected to exceed $1 billion, amortizing over a period that extends into 2004. "By expanding our relationship with GE Capital, Xerox customers with operations in the U.S., Canada or both countries will benefit from access to consistent and flexible financing services and administrative support,'' said Barry D. Romeril, Xerox chief financial officer. "At the same time, it moves Xerox closer toward its goal of transitioning equipment financing to external partners - a key element of Xerox's turnaround strategy that is transforming our balance sheet by reducing debt and strengthening liquidity.'' "Our agreement with Xerox is developing into a global, long-term relationship that exemplifies our commitment to providing innovative financing programs that allow companies and their customers to better concentrate on their core businesses,'' said Bill Cary, chief executive officer of GE Capital Vendor Financial Services. "Our goal is to bring greater value and efficiencies to Xerox and their customers through our leasing expertise and the application of the latest technology and Six Sigma quality processes.'' Last year, Xerox announced it would move to third-party equipment financing as part of the company's strategy to restore its financial strength and return to profitability. Over time, this is expected to remove as much as $10 billion in financing-related debt from the Xerox balance sheet. About 65 percent of Xerox's total debt is related to equipment financing; more than half of that is from the U.S. and Canada.

 

 

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