Xerox signs new $500 million revolver with Citibank

By William Gullotti

Buffalo, N.Y., July 13 – Xerox Corp. and its parent company, Xerox Holdings Corp., entered into a new $500 million credit agreement with Citibank, NA as administrative agent on July 7, according to an 8-K filing with the Securities and Exchange Commission.

The new facility features an uncommitted $150 million accordion feature and a $150 million letter of credit subfacility.

Maturity is scheduled to be July 7, 2024, which is subject to a springing maturity condition. If the outstanding amount of the company’s senior notes due 2023 is in excess of $300 million exactly 91 days prior to the series’ scheduled maturity date, revolver commitments will terminate, at which point outstanding borrowings will instead mature on the springing maturity date.

Borrowings will bear interest at SOFR, CDOR, Euribor, Sonia or Tonar plus a margin ranging from 150 basis points to 225 bps, with the margin determined by the company’s total net leverage ratio. At closing, the margin was 200 bps.

The commitment fee is between 15 bps and 37.5 bps.

Although there are no scheduled principal payments prior to maturity, any event of default will cause the entire outstanding principal amount borrowed to immediately become due and payable, including all accrued unpaid interest and other amounts owed. In certain instances, an event of default will be subject to the expiration of applicable cure periods.

Xerox must maintain an unrestricted cash amount of at least $500 million and maintain specific total net leverage and interest coverage ratios for the end of each fiscal quarter.

The new revolver imposes additional restrictions on Xerox and its subsidiaries, which limit the amount of dividends payable and the amount of shares permitted to be repurchased. Provided there is no event of default existing, the company may declare and pay cash dividends on shares of its common stock and its preferred stock, and may repurchase shares of its common stock and its preferred stock (1) in an unlimited amount if, at the time such dividend or repurchase is made, the total net leverage ratio is 3.5 to 1.00 or less or (2) in an aggregate amount in any fiscal year not to exceed the greater of (x) $200.0 million or (y) 50% of free cash flow for the prior fiscal year, commencing with the fiscal year ending December 31, 2022.

In addition to serving as administrative agent, Citibank is also a joint lead arranger and joint bookrunner along with Mizuho Bank, Ltd., Credit Agricole CIB, Truist Securities, Inc. and Bank of Nova Scotia.

At closing, the company’s 2017-signed agreement, amended March 24 to total $1.5 billion, with Citibank, NA as administrative agent was also terminated.

Xerox is a Norwalk, Conn.-based supplier of print and digital document products and services.

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