Xerox Swaps $174M of Debt at 30% Haircut, Doubles Interest Rate
Company Background
Xerox Holdings is a global print and document-technology company with more than 120 years of operating history, serving roughly 200,000 clients including 90% of the Fortune 500. Its market capitalization is approximately $136 million. The company completed a leveraged acquisition of Lexmark in July 2025, dramatically expanding its scale but also its debt load — long-term debt stood at $4.06 billion as of September 30, 2026.
The Lexmark integration has yet to produce financial stability. Through the first nine months of 2026, Xerox recorded a GAAP net loss of $1.107 billion and negative free cash flow of $70 million. A $959 million non-cash goodwill impairment booked in Q3 — triggered by what management described as continued macro uncertainty and sustained memory price increases affecting the Print and Other segment — erased shareholders' equity entirely, leaving a $(683) million book deficit at September 30, 2026.
Management cut full-year 2026 adjusted operating income guidance to $450–475 million from a prior range of $555–605 million, and free cash flow guidance to $50–100 million from approximately $250 million. Common and preferred dividends were suspended in the third quarter.
What Was Disclosed
Xerox completed the previously announced debt exchange on November 13, 2026. Holders of $173,679,000 in aggregate principal of 5.500% Senior Notes due 2028 — representing approximately 31.2% of the outstanding balance of those notes — exchanged their holdings for $121,086,000 of newly issued 10.250% Senior Secured First Lien Notes (2026 Issue) due 2030 and 3,872,062 shares of Xerox Holdings common stock. Following settlement, $382,456,000 of the 5.500% 2028 notes remain outstanding.