Below is a brief press report.
Xerox Completes $3.6 Bln Recapitalization
NEW YORK (Reuters) 26/6/03 – Xerox Corp., the office copier maker, on Wednesday said it has completed a $3.6 billion recapitalization designed to strengthen its balance sheet, reduce interest payments and push off debt maturities.
The Stamford, Connecticut-based company conducted offerings of $472 million of common stock, $920 million of convertible securities, $700 million of seven-year notes and $550 million of ten-year notes, and also obtained $1 billion of new bank financing.
Xerox said it used net proceeds from the offerings and cash to pay down $3.1 billion outstanding under its old bank facility, and terminated that facility. It said it boosted the stock offering from $410 million and the convertible offering from $800 million because of higher-than-expected demand. Xerox had originally planned to raise a total of $3.1 billion.
The company said it expects the reduced interest expense will largely offset the dilution from the issuance of new shares in both the second half of 2003, and 2004.
Answer the following questions:
– Has Xerox Corp increased or decreased its indebtedness? Give reasons in support of your answer.
– Explain the statement in the last paragraph to your 12 year old nephew.