Xerox Says Its Future Depends on Loan Agreement

Xerox

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raised the prospect of insolvency if it's unable to renegotiate a huge loan agreement, but said it was making "significant progress" with its bank group toward that goal.

The copier maker said in a filing it would be forced to "consider the full range of strategic measures" if it can't renegotiate the $7 billion revolving credit agreement before it matures Oct. 22. "These circumstances would raise substantial doubt about our ability to continue as a going concern," Xerox said, adding that it had about $4 billion of cash on hand as of Dec. 31, 2001.

Xerox agreed to a $10 million government fine last week related to its late-1990s accounting procedures and has been trying to pare costs and restructure for more than a year in the face of rising competition in its core copier franchise. The company neither admitted nor denied guilt in agreeing to the fine.

Xerox made the credit pact disclosures in a registration it filed for an exchange offer for its $600 million principal amount of 9 3/4% senior notes due 2009. Xerox is offering to exchange their notes for identical notes that are freely tradeable.