Xerox reaches week's high at 93/95 on completion of $7 billion revolver refinancing

By Sara Rosenberg

New York, June 21 - Xerox Corp. was quoted higher on Friday with a bid of 93 and an offer of 95 after the company said it successfully renegotiated its $7 billion revolver, according to a trader.

The company had anticipated completing its new credit facility before June 30 and managed to meet its deadline with a little more than a week to spare.

On Thursday, Xerox was bid at 92 and offered at 93.

"[Xerox has] been pretty quiet, though, with not much trading taking place," the trader said. "It was a foregone conclusion that [the refinancing] was going to happen."

Friday's levels were the highest that Xerox has reached all week. The bid fluctuated between 91 and 92 based on market speculation over the refinancing. The week began with market talk that four or five banks were holding out on the deal. By mid-week, the story had changed, with UBS Warburg being named as the sole bank holding out on the transaction. Once UBS was named, market participants expected the deal to get done due to the assumption that UBS would try to avoid negative press. The offer stayed steady at 93 throughout the week.

Under the new agreement the Stamford, Conn. document company repaid $2.8 billion of the $7 billion revolver and obtained a new $4.2 billion credit facility. The new loan consists of a $1.5 billion term loan A due April 30, 2005, a $500 million term B due April 30, 2005, a $700 million term C due Sept. 15, 2002 and a $1.5 billion revolver, which includes a $200 million letter of credit sub-facility, due April 30, 2005, according to a filing with the Securities and Exchange Commission.

The term A, term C and the revolver have an interest rate of Libor plus 450 basis points. The term B has an interest rate that can range from Libor plus 400 to 450 basis points depending on the restricted assets security amount in effect.

J.P. Morgan Securities Inc. and Bank One were joint lead arrangers. J.P. Morgan Securities Inc. and Salomon Smith Barney Inc. were joint bookrunners. Bank One acted as administrative agent, collateral agent and letter of credit issuing bank. JPMorgan Chase Bank acted as documentation agent and Citibank acted as syndication agent.

"Xerox's strengthened financial position and improved operational performance contributed to our successful renegotiation of the revolver," said Anne M. Mulcahy, chairman and chief executive officer, in a news release. "With this new credit facility, we are better positioned to effectively manage our liquidity while focusing intently on building back value in the company."

Adelphia Communications Corp. continued to hang steady despite media reports of a possible bankruptcy filing, with the Olympus loan being bid in the mid 80's and offered in the high 80's and the Century loan remained in the loan 80's, a fund manager said.

The Coudersport, Pa. cable company is expected to file for Chapter 11 on Monday, according to various media reports. In addition, news reports said the company has reached an agreement for $1.5 billion in debtor-in-possession financing. The company could not immediately be reached to confirm this information.

In other news, Sinclair Broadcast Group Inc. held a conference call Friday regarding its new $600 million credit facility, which will be used to refinance existing debt, according to a fund manager. The Hunt Valley, Md. broadcasting company's loan consists of a $225 million revolver at Libor plus 225 basis points and a $375 million term B at Libor plus 225 basis points, market sources previously told Prospect News. JPMorgan Chase is the lead bank on the deal.

Market talk is that Buffets Inc. increased the size of its bank loan (B1/BB-) by $30 to $285 million after reducing its bond offering by $30 million to $230 million. Credit Suisse First Boston is the lead bank on the deal and Fleet Securities is the syndication agent. Proceeds combined with proceeds from the senior subordinated note sale will be used to refinance the company's capital structure and to pay sponsor dividends.

The syndicate was not immediately available to confirm this information.

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