STAMFORD, Conn.--June 11, 2003-- Xerox Corporation announced today a comprehensive recapitalization strategy of about $3.1 billion that will deliver and strengthen the company's balance sheet, extend debt maturities and provide operating and financial flexibility. The financing plan includes common stock, mandatory convertible preferred securities, senior unsecured notes and a bank financing transaction.
Xerox has already received commitments from Citigroup, Deutsche Bank, Goldman Sachs, JPMorgan, Merrill Lynch and UBS for a new $1 billion credit facility consisting of a $700 million revolving facility and a $300 million term loan, both maturing in September 2008. This new credit facility is contingent upon Xerox raising $1.5 billion through its financing plan, including at least $500 million of common and preferred equity.
Xerox plans to use proceeds from the recapitalization transaction and the new term loan as well as a portion of its current cash balance to repay and terminate the $3.1 billion outstanding from its current bank facility.
As part of the recapitalization strategy Xerox intends to issue the following:
Approximately 40 million shares of common stock valued at $434 million based on Monday's closing stock price of $10.84.
Approximately $650 million of mandatory convertible preferred securities.
Approximately $1 billion of a combination of 7-year and 10-year senior unsecured notes.
Subject to market conditions, Xerox intends to complete the recapitalization transaction by the end of this month. As a result, the company expects that its reduced interest expense will largely offset the dilutive impact of the additional shares in the second half of this year and in 2004.
To recognize the remaining unamortized fees associated with the 2002 credit facility, Xerox will record a $70 million pre-tax charge in the second quarter. Excluding this charge, the company continues to expect that second-quarter earnings will be in the range of 9 cents to 12 cents per share.
The common stock, mandatory convertible preferred securities and senior unsecured notes will be issued by Xerox and sold under the company's $3 billion universal shelf registration statement.
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