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 CREDIT CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 1-8133 06-1024525
(State or other (Commission File (IRS Employer
jurisdiction of Number) Identification
incorporation) No.)
100 First Stamford Place
P. O. Box 10347
Stamford, Connecticut 06904-2347
(Address of principal executive offices)(Zip Code)
Registrant's telephone number, including area code:
(203) 325-6600
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Item 5. Other Events
Registrant's parent, Xerox Corporation ("Xerox"), announced on
June 21, 2002 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 Xerox, Registrant 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, Xerox permanently repaid
$2.8 billion of the Old Revolver. Of the $2.8 billion payment,
$1.0 billion represented a repayment of all of Registrant's borrowings
under the Old Revolver. Registrant is not and will not become a
borrower under the New Credit Facility.
Under the New Credit Facility, there is currently $4.2 billion of
loans outstanding, 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 is currently, and will
remain, the borrower of all of the term loans.
Xerox is 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 Xerox 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 and by liens on the assets
of substantially all of its U.S. subsidiaries (excluding Registrant)
and are guaranteed by substantially all of its U.S. subsidiaries
(including Registrant). Registrant's guaranty of obligations under
the New Credit Facility, however, is subordinated to all of
Registrant's capital markets debt outstanding as of June 21, 2002.
Under the terms of certain of Xerox's 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 and (ii) Xerox's non-financing subsidiaries
that have a consolidated net worth of at least $100 million, without
triggering a requirement to also secure those indentures, is limited
to the excess of (a) 20% of Xerox's consolidated net worth (as defined
in Xerox's 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 Xerox's 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 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 Xerox receives 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 Registrant to Xerox 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 and its subsidiaries. Thus, the New Credit Facility
does not affect Xerox's or Registrant's ability to continue to
monetize receivables, including, in the case of Xerox, under the
agreements with General Electric Capital Corporation and others. In
addition to other defaults customary for facilities of this type,
defaults on debt of, or bankruptcy of, Xerox or certain of its
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 of Xerox to be in compliance with any material provision
of the New Credit Facility could have a material adverse effect on
Xerox's liquidity and operations and, because Registrant is dependent
upon Xerox for its liquidity, such failure by Xerox to be in
compliance could also have a material adverse effect on Registrant's
liquidity and operations.
Copies of the New Credit Facility and related agreements are filed as
exhibits to Xerox Corporation's Current Report on Form 8-K
dated June 21, 2002.
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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 CREDIT CORPORATION
/s/ MARTIN S. WAGNER
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By: Martin S. Wagner
Secretary
Dated: June 24, 2002