New Issue: Xerox upsizes notes to $1.25 billion, seven-year notes yield 7 1/8%, 10-year notes yield 7 5/8%

By Paul A. Harris

St. Louis, June 19 - Xerox Corp. priced an upsized $1.25 billion two-tranche senior notes offering on Thursday, according to a syndicate source. The deal was increased from $1 billion.

The company sold $700 million of seven-year notes at par to yield 7 1/8%. Price talk was for a yield in the 7¼% area. The $550 million tranche of 10-year tranche priced at par to yield 7 5/8%. Price talk on the 10-year tranche was 50 basis points behind the seven-year tranche.

Deutsche Bank Securities, Citigroup, Goldman Sachs, JP Morgan, Merrill Lynch and UBS Investment Bank were bookrunners on the public offering. Danske Markets, Credit Suisse First Boston, Fleet Securities and PNC Capital Markets were co-managers.

Proceeds are slated to repay bank debt.

Issuer:	Xerox Corp.
Amount:	$1.25 billion
Security description:	Senior notes
Settlement date:	June 25, 2003 (T+4)
Ratings:	Moody's: B1
	Standard & Poor's: B+
Bookrunners:	Deutsche Bank Securities, Citigroup, Goldman Sachs, JP Morgan, Merrill Lynch, UBS Investment Bank
Seven-year tranche
Amount:	$700 million
Maturity:	June 15, 2010
Coupon:	7 1/8%
Price:	Par
Yield:	7 1/8%
Spread:	443 basis points
Calls:	Make-whole call at Treasuries plus 50 basis points
Price talk:	7¼% area
10-year tranche
Amount:	$550 million
Maturity:	June 15, 2013
Coupon:	7 5/8%
Price:	Par
Yield:	7 5/8%
Spread:	429 basis points
Call features:	Callable on June 15, 2008 at 103.813, 102.542, 101.271, par on June 15, 2011 and thereafter
Price talk:	50 basis points behind the seven-year tranche

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