Xerox Unveils Radical Financial Restructuring to Tackle Debt

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In a bold move to repair its balance sheet, Xerox Holdings Corporation has initiated a sweeping capital restructuring. The company has completed a large-scale distribution of warrants to shareholders and filed to register over 82 million new common shares. This aggressive strategy, launched amidst a severe stock price decline, raises a critical debate: is this a necessary step toward solvency, or an excessive burden on current investors?

At the core of Xerox's strategy is a warrant distribution to shareholders of record as of February 9, 2026. These investors will receive one warrant for every two shares they own. Each warrant carries an exercise price of $8.00 and remains valid until February 2028.

A key feature of this plan is the flexible exercise mechanism. Warrant holders can choose to pay the $8.00 per share in cash. Alternatively, they can exercise their warrants by surrendering specific series of Xerox notes maturing in 2028, 2029, and 2039. This structure is explicitly designed to reduce the company's substantial debt obligations. A full cash exercise of all warrants would inject approximately $618 million into Xerox's coffers. The debt-for-equity swap option, however, would provide immediate relief by lowering the total debt burden and reducing future interest expenses.

Shareholder Dilution Looms Large

The financial stabilization effort comes with significant potential consequences for existing equity holders. The registration of 82,463,860 new shares primarily covers stock reserved for the warrant exercise. An additional 5.2 million shares are earmarked for resale by B. Dyson Capital Advisors as compensation for financial advisory services.

Should every warrant be exercised, the total number of outstanding shares would surge by roughly 64%, exceeding 211 million. Such a substantial increase in the share count typically leads to significant earnings per share dilution, which can pressure the value of current holdings.

Market Challenges and Investor Skepticism

Xerox is implementing this complex restructuring against a backdrop of severe market pressure. The company's shares are currently trading near their 52-week low at approximately $2.03, a stark drop from the yearly high of $8.26. High levels of short interest and disappointing recent quarterly results have amplified investor skepticism.

For Xerox management, reducing interest-bearing liabilities is now the paramount objective. The company aims to create the financial breathing room necessary for a broader operational turnaround. The success of this radical capital overhaul will likely determine Xerox's trajectory for years to come.