Xerox greenshoe lifts 3.75% convertibles due 2030 to $400 million

By Marisa Wong

Los Angeles, March 25 – The underwriters of Xerox Holdings Corp.’s 3.75% convertible senior notes due 2030 exercised their $50 million over-allotment option in full, bringing the total size of the issuance to $400 million, according to a Monday press release.

Xerox priced an upsized $350 million of the six-year convertible notes after the market close on March 6 at par with a coupon of 3.75% and an initial conversion premium of 25%, as previously reported.

Pricing came tighter than the rich end of initial 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. was the bookrunner for the Rule 144A offering.

The initial size of the offering was $300 million with a greenshoe of $45 million.

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 enter into capped call transactions with a cap price of $28.34, which represents a 70% premium over the last reported share price as of March 6.

Proceeds were used to fund the cost of the call spread and, together with proceeds from a concurrent $500 million sale of senior notes due 2029, fund a tender offer for any and all of the company’s 3.8% senior notes due 2024 and a portion of its 5% senior notes due 2025. 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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