Xerox Comes to Market with $500 Million Deal
2009-05-06 by: Mike Scorelle
Xerox Corporation came to market with a 5-Year $500 million offering. The deal was lead by Bank of America, Citi, Goldman Sachs and JP Morgan.
Standard & Poor's Ratings Services said that it assigned its 'BBB' senior unsecured rating to the proposed $500 million five year notes to be issued by Xerox Corp. The corporate credit rating is BBB/Negative/--. Proceeds from the new debt are to be used to repay outstanding balances under the revolving credit facility.
"The rating reflects Xerox's good position in its core document management business and large base of recurring post-sales revenues and cash flow," said Standard & Poor's credit analyst Lucy Patricola. Challenging industry conditions, along with leverage that we view as currently high for the rating, partially offset these factors.
Xerox is a global company serving the document management markets, with total reported revenues of $17.6 billion in 2008. Global softness in IT spending has dampened the company's revenue trends over the past two quarters. Adjusting for currency, revenues declined 12% in the March quarter compared to the prior year, following a 5% decline in December. Declines were broad-based; both the production and office segments were down, 9% and 13% in constant currency, respectively. Color revenues and developing markets, the company's two growth engines, also generated declines in the past two quarters. Xerox has responded to the weak operating environment with a $426 million restructuring action and incremental cost savings actions that the company expects to generate $550 million in savings in 2009.
The deal is rated Baa2 by Moody’s
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