Xerox talks $300 million six-year convertible notes to yield 4%-4.5%, up 17.5%-22.5%

By Abigail W. Adams

Portland, Me., March 5 – Xerox Holdings Corp. plans to price $300 million of six-year convertible notes after the market close on Wednesday with price talk for a coupon of 4% to 4.5% and an initial conversion premium of 17.5% to 22.5%, according to a market source.

Citigroup Global Markets Inc. is the bookrunner for the Rule 144A offering, which carries a greenshoe of $45 million.

ICR Capital LLC is financial adviser to the company.

The notes are non-callable until Sept. 20, 2027 and then subject to a 130% hurdle.

They will be settled in cash up to the principal amount with any remaining amounts to be settled in cash, shares or a combination of both at the company’s option.

In connection with the offering, the company will enter into capped call transactions.

Proceeds will be used to fund the cost of the call spread and fund a tender offer for any and all of the company’s 3.8% senior notes due 2024, which have $300 million in principal outstanding, and a portion of the 5% senior notes due 2025, which have $750 million in principal outstanding.

Remaining proceeds will be used for general corporate purposes.

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

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