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Xerox Prices New Financing; Signs New Credit Agreement

Press release from the issuing company

STAMFORD, Conn.--June 19, 2003--Xerox Corporation set pricing today on the issuance of new common stock, mandatory convertible preferred stock and senior unsecured notes. The company also said that it finalized the terms of a new revolving credit facility. Upon the closing of these transactions, Xerox will complete its recapitalization plan announced earlier this month. This financing will de-lever the balance sheet and extend debt maturities, providing Xerox with additional operating and financial flexibility. The company will issue approximately 40 million shares of common stock at $10.25 per share and will issue 8 million shares of 3-year mandatory convertible preferred stock at $100 per share. The mandatory convertible preferred stock will have a dividend yield of $6.25 per share and a conversion premium of 20 percent over the common stock offering price of $10.25 per share. Xerox will also issue $750 million of 7-year senior unsecured notes due 2010 and bearing interest at 7 1/8 percent. In addition, $500 million of 10-year senior unsecured notes due 2013 will be issued, bearing interest at 7 5/8 percent. The company noted that the mandatory convertible preferred stock and the senior unsecured notes were oversubscribed from initial expectations due to strong demand. Also today Xerox entered into an agreement with 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, which is expected to close on June 25, becomes effective upon successful completion of the company's common stock and mandatory convertible preferred stock offerings.