Xerox prices oversubscribed $600 million exchange offer for six series

By Wendy Van Sickle

Columbus, Ohio, March 14 – Xerox Corp. announced pricing in its offer to exchange up to $600 million of six series of existing notes for new notes and cash on Tuesday after announcing earlier in the day that holders had tendered $720 million of the notes by the early deadline.

Since the offer is now oversubscribed, the minimum note condition has been satisfied and tenders of the lowest priority issue will be accepted on a pro rata basis using a factor of 17%, according to a news release.

In addition, Xerox does not expect to accept any further tenders.

Initial settlement is scheduled for March 17.

Holders had tendered notes by the early deadline as follows, with the securities listed in order of acceptance priority and the cash payments reflecting a $50.00 early participation payment per $1,000 principal amount:

• $260,001,000 of the $1 billion of 6.35% notes due 2018. All will be accepted. For each $1,000 principal amount, holders will receive $500 of new notes and a cash payment of $551.71, which was set using a spread of 45 basis points over the 1.125% Treasury due Feb. 28, 2019;

• $96,362,000 of the $650 million of 5.625% notes due 2019. All will be accepted. For each $1,000 principal amount, holders will receive $500 of new notes and a cash payment of $580.25, which was set using a spread of 120 bps over the 1.125% Treasury due Feb. 28, 2019;

• $94,016,000 of the $500 million of 2.75% notes due 2019. All will be accepted. For each $1,000 principal amount, holders will receive $500 of new notes and a cash payment of $508.22, which was set using a spread of 95 bps over the 1.125% Treasury due Feb. 28, 2019;

• $87,236,000 of the $400 million of 2.8% notes due 2020. All will be accepted. For each $1,000 principal amount, holders will receive $500 of new notes and a cash payment of $498.15, which was set using a spread of 120 bps over the 1.375% Treasury due Feb. 15, 2020;

• $37,802,000 of the $400 million of 3.5% notes due 2020. All will be accepted. For each $1,000 principal amount, holders will receive $500 of new notes and a cash payment of $519.05, which was set using a spread of 125 bps over the 1.375% Treasury due Feb. 15, 2020; and

• $145,014,000 of the $400 million of 2.75% notes due 2020. Tenders will be accepted using a factor of 17%. For each $1,000 principal amount, holders will receive $500 of new notes and a cash payment of $493.11, which was set using a spread of 130 bps over the 1.375% Treasury due Feb. 15, 2020.

Pricing was set at 2 p.m. ET on Tuesday.

Xerox announced the tender on March 1, saying it was offering cash and new notes due March 17, 2022 for the existing notes.

The company said that if $600 million or more of the existing notes were tendered as of the early participation date, 5 p.m. ET on March 13, it would purchase and exchange tendered existing notes for $300 million in cash – plus premiums, if any, and accrued interest – and $300 million of new notes.

If less than $600 million principal amount of existing notes were tendered by the early deadline, the company said that it would only purchase up to $300 million total principal amount of existing notes for cash.

Xerox also said it expected to issue $300 million of new notes as a result of the exchange offer but reserved the right to increase that amount.

The offers will expire at 11:59 p.m. ET on March 27.

Global Bondholder Services Corp. (866 794-2200 or 212 430-3774) is the exchange agent and the information agent for the offers, which are being conducted under Rule 144A and Regulation S.

Xerox is a maker of office machines based in Norwalk, Conn.

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