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Xerox Corp. (BB63)

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Monday 24 June, 2002

Xerox Corp.

Miscellaneous - Form 8-K

Miscellaneous - Form 8-K 

    LONDON-(BUSINESS WIRE)-June 24, 2002-

                  SECURITIES AND EXCHANGE COMMISSION
                        Washington, D.C. 20549



                               FORM 8-K
                            CURRENT REPORT

                  Pursuant to Section 13 or 15(d) of
                  The Securities Exchange Act of 1934



        Date of Report (date of earliest event reported):
                             June 21, 2002


        XEROX CORPORATION
 (Exact name of registrant as specified in its charter)

New York                          1-4471                              16-0468020
(State or other                 (Commission File                    (IRS Employer
jurisdiction of                    Number)                           Identification
incorporation)                                                                 No.)


                          800 Long Ridge Road
                           P. O. Box 1600
                   Stamford, Connecticut 06904-1600
          (Address of principal executive offices)(Zip Code)


    Registrant's telephone number, including area code:
                            (203) 968-3000


                            Not Applicable
        (Former name or former address, if changed since last report)




Item 5.  Other Events.

On June 21, 2002, Registrant (or 'Xerox Corporation' or 'we' or 'our'
or 'us') announced that it had entered into an Amended and Restated
Credit Agreement (the 'New Credit Facility') with a group of lenders,
replacing the $7 Billion Revolving Credit Agreement dated October 22,
1997 among Registrant, Xerox Credit Corporation and certain Overseas
Borrowers, as Borrowers, various Lenders and Morgan Guaranty Trust
Company of New York, The Chase Manhattan Bank, Citibank, N.A. and Bank
One, as Agents (the 'Old Revolver'). At that time, we permanently
repaid $2.8 billion of the Old Revolver. Accordingly there is
currently $4.2 billion outstanding under the New Credit Facility,
consisting of three tranches of term loans totaling $2.7 billion and a
$1.5 billion revolving facility that includes a $200 million letter of
credit sub-facility. The three term loan tranches include a $1.5
billion amortizing 'Tranche A' term loan maturing on April 30, 2005, a
$500 million 'Tranche B' term loan maturing on April 30, 2005, and a
$700 million 'Tranche C' term loan which matures on September 15,
2002. Xerox Corporation is currently, and will remain, the borrower of
all of the term loans. The revolving loans are available, without
sub-limit, to Xerox Corporation, Xerox Canada Capital Limited
('XCCL'), Xerox Capital Europe plc ('XCE') and other foreign
subsidiaries requested by us from time to time that meet certain
qualifications. We are required to repay $400 million of the Tranche A
loan and $5 million of the Tranche B loan in semi-annual installments
in 2003, and $600 million of the Tranche A loan and $5 million of the
Tranche B loan in semi-annual installments in 2004. The remaining
portions of the term loans contractually mature on April 30, 2005, but
we could be required to repay portions earlier upon the occurrence of
certain events, as described below. In addition, all loans under the
New Credit Facility mature upon the occurrence of a change of control.

Subject to certain limits described in the following paragraph, all
obligations under the New Credit Facility are secured by liens on
substantially all domestic assets of Xerox Corporation and by liens on
the assets of substantially all of our U.S. subsidiaries (excluding
Xerox Credit Corporation) and are guaranteed by substantially all of
our U.S. subsidiaries. In addition, revolving loans outstanding from
time to time to XCE (currently $605 million) are also secured by all
of XCE's assets and are also guaranteed on an unsecured basis by
certain foreign subsidiaries that directly or indirectly own all of
the outstanding stock of XCE. Revolving loans outstanding from time to
time to XCCL (currently $300 million) are also secured by all of
XCCL's assets and are also guaranteed on an unsecured basis by our
material Canadian subsidiaries, as defined (although the guaranties of
the Canadian subsidiaries will become secured by their assets in the
future if certain events occur).

Under the terms of certain of our outstanding public bond indentures,
the outstanding amount of obligations under the New Credit Facility
that can be secured by assets (the 'Restricted Assets') of (i) Xerox
Corporation and (ii) our non-financing subsidiaries that have a
consolidated net worth of at least $100 million, without triggering a
requirement to also secure these indentures, is limited to the excess
of (a) 20% of our consolidated net worth (as defined in the public
bond indentures) over (b) a portion of the outstanding amount of
certain other debt that is secured by the Restricted Assets.
Accordingly, the amount of the debt secured under the New Credit
Facility by the Restricted Assets (the 'Restricted Asset Security
Amount') will vary from time to time with changes in our consolidated
net worth. The Restricted Assets secure the Tranche B loan (up to the
Restricted Asset Security Amount); any Restricted Asset Security
Amount in excess of the outstanding Tranche B loan secures, on a
ratable basis, the other outstanding loans under the New Credit
Facility. The assets of XCE, XCCL and many of the subsidiaries
guarantying the New Credit Facility are not Restricted Assets because
those entities are not restricted subsidiaries as defined in our
public bond indentures. Consequently, the amount of debt under the New
Credit Facility secured by their assets is not subject to the
foregoing limits.

The New Credit Facility loans generally bear interest at LIBOR plus
4.50%, except that the Tranche B loan bears interest at LIBOR plus a
spread that varies between 4.00% and 4.50% depending on the Restricted
Asset Security Amount in effect from time to time. Specified
percentages of any net proceeds we receive from capital market debt
issuances, equity issuances or asset sales during the term of the New
Credit Facility must be used to reduce the amounts outstanding under
the New Credit Facility, and in all cases any such amounts will first
be applied to reduce the Tranche C loan. Once the Tranche C loan has
been repaid, or to the extent that such proceeds exceed the
outstanding Tranche C loan, any such prepayments arising from debt and
equity proceeds will first permanently reduce the Tranche A loans, and
any amount remaining thereafter will be proportionally allocated to
repay the then-outstanding balances of the revolving loans and the
Tranche B loans and to reduce the revolving commitment accordingly.
Any such prepayments arising from asset sale proceeds will first be
proportionally allocated to permanently reduce any outstanding Tranche
A loans and Tranche B loans, and any amounts remaining thereafter will
be used to repay the revolving loans and to reduce the revolving
commitment accordingly. Notwithstanding the foregoing description, the
revolving loan commitment cannot be reduced below $1 billion.

The New Credit Facility contains affirmative and negative covenants
including limitations on issuance of debt and preferred stock, certain
fundamental changes, investments and acquisitions, mergers, certain
transactions with affiliates, creation of liens, asset transfers,
hedging transactions, payment of dividends, inter-company loans and
certain restricted payments, and a requirement to transfer excess
foreign cash, as defined, and excess cash of Xerox Credit Corporation
to Xerox Corporation in certain circumstances. Despite a general
limitation on the creation of liens, the New Credit Facility provides
for the creation of liens from time to time in connection with the
monetization or other financing of discrete pools of receivables,
leases and other financial assets by Xerox Corporation and its
subsidiaries. Thus, the New Credit Facility does not affect our
ability to continue to monetize our receivables under the agreements
with General Electric Capital Corporation and others. No cash
dividends can be paid on our Common Stock for the term of the New
Credit Facility. Cash dividends may be paid on preferred stock
provided there is then no event of default. In addition to other
defaults customary for facilities of this type, defaults on debt of,
or bankruptcy of, Xerox Corporation or certain subsidiaries would
constitute a default under the New Credit Facility.


The New Credit Facility also contains financial covenants which the
Old Revolver did not contain, including:

* Minimum EBITDA (rolling four quarters, as defined)

* Maximum Leverage (total adjusted debt:EBITDA, as defined)

* Maximum Capital Expenditures (annual test)

* Minimum Consolidated Net Worth (quarterly test, as defined)

Any failure to be in compliance with any material provision of the New
Credit Facility could have a material adverse effect on our liquidity
and operations.

Following the repayment of the $2.8 billion portion of the Old
Revolver and $1.3 billion in debt that matured this quarter, our
current cash position is approximately $1.7 billion.

We expect that the higher interest rates under the New Credit Facility
will increase our interest expense by approximately $80 million in
2002 and $140 million in 2003, net of interest income and including
transaction fees.

Copies of the New Credit Facility and related agreements are filed as
exhibits to this Current Report on Form 8-K.


Item 7.  Financial Statements and Exhibits.

(c) Exhibits

(4)(h)(5) First Supplemental Indenture dated as of June 21, 2002
between Registrant and Wells Fargo, as trustee, to the January 17,
2002 U.S. Dollar Indenture.

(4)(h)(6) First Supplemental Indenture dated as of June 21, 2002
between Registrant and Wells Fargo, as trustee, to the January 17,
2002 Euro Indenture.

(4)(l)(1) Amended and Restated Credit Agreement dated as of June 20,
2002 among Registrant and the Overseas Borrowers, as Borrowers,
various Lenders and Bank One, N.A., JPMorgan Chase Bank and Citibank,
N.A., as Agents (the 'Amended Credit Agreement').

(4)(l)(2) Guarantee and Security Agreement dated as of June 21, 2002
among Registrant, the Subsidiary Guarantors and Bank One, N.A., as
Agent, relating to the Amended Credit Agreement.

(4)(l)(3) Canadian Guarantee and Security Agreement dated as of June
21, 2002 among Xerox Canada Capital Ltd., the Guarantors and Bank One,
N.A., Canada Branch, as Agent, relating to the Amended Credit
Agreement.

(4)(l)(4) Deed of Guarantee and Indemnity Made June 21, 2002 between
Bank One, N.A., as Agent, and Xerox Overseas Holdings Limited and
Xerox UK Holdings Limited, as Guarantors, relating to Obligations of
Xerox Capital (Europe) plc and the Amended Credit Agreement.

(4)(l)(5) Debenture dated June 21, 2002 between Xerox Capital (Europe)
plc and Bank One, N.A., as Agent, relating to the Amended Credit
Agreement.

(4)(l)(6) Mortgage, Assignment of Leases and Rents, Security
Agreement, Financing Statement and Fixture Filing dated as of June 21,
2002 by Xerox Corporation, as Mortgagor, to Bank One, N.A., as Agent
for the Lenders, the Mortgagee, relating to property in the County of
Monroe, State of New York and the Amended Credit Agreement.

                                                                                                                      


                              SIGNATURES

    Pursuant to the requirements of the Securities Exchange Act of
1934, Registrant has duly authorized this report to be signed on its
behalf by the undersigned duly authorized.
                                                              XEROX CORPORATION

                                                             /s/ Martin S. Wagner      
-------------------------------------------------
                                                              By:      Martin S. Wagner
Dated: June 21, 2002                                          Assistant Secretary




                             Exhibit Index


Exhibit No.       Description

(4)(h)(5)         First  Supplemental  Indenture dated as of June 21, 2002 between  Registrant and Wells Fargo,
                  as trustee, to the January 17, 2002 U.S. Dollar Indenture.

(4)(h)(6)         First  Supplemental  Indenture dated as of June 21, 2002 between  Registrant and Wells Fargo,
                  as trustee, to the January 17, 2002 Euro Indenture.

(4)(l)(1)         Amended and Restated  Credit  Agreement  dated as of June 21, 2002 among  Registrant  and the
                  Overseas  Borrowers,  as Borrowers,  various Lenders and Bank One, N.A.,  JPMorgan Chase Bank
                  and Citibank, N.A., as Agents (the 'Amended Credit Agreement').

(4)(l)(2)         Guarantee and Security  Agreement dated as of June 21, 2002 among Registrant,  the Subsidiary
                  Guarantors and Bank One, N.A., as Agent, relating to the Amended Credit Agreement.

(4)(l)(3)         Canadian  Guarantee  and  Security  Agreement  dated as of June 21, 2002 among  Xerox  Canada
                  Capital Ltd., the Guarantors and Bank One,  N.A.,  Canada Branch,  as Agent,  relating to the
                  Amended Credit Agreement.

(4)(l)(4)         Deed of Guarantee and Indemnity Made June 21, 2002
                  between Bank One, N.A., as Agent, and Xerox Overseas
                  Holdings Limited and Xerox UK Holdings Limited, as
                  Guarantors, relating to Obligations of Xerox Capital
                  (Europe) plc and the Amended Credit Agreement.

(4)(l)(5)         Debenture  dated June 21, 2002 between  Xerox  Capital  (Europe) plc and Bank One,  N.A.,  as
                  Agent, relating to the Amended Credit Agreement.

(4)(l)(6)         Mortgage, Assignment of Leases and Rents, Security
                  Agreement, Financing Statement and Fixture Filing
                  dated as of June 21, 2002 by Xerox Corporation, as
                  Mortgagor, to Bank One, N.A., as Agent for the
                  Lenders, the Mortgagee, relating to property in the
                  County of Monroe, State of New York and the Amended
                  Credit Agreement.

*T
   Short Name: Xerox Corp.
   Category Code: MSC
   Sequence Number: 00000336
   Time of Receipt (offset from UTC): 20020624T180650+0100

                                                                                                                             

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