BW20030626002041  20030626T122330Z UTC


( BW)(XEROX-CORP.)(XRX) Xerox Completes $3.6 Billion Recapitalization; 
New Credit Facility Effective Today

    Business Editors
    UK REGULATORY NEWS

    LONDON--(BUSINESS WIRE)--June 26, 2003--

       Strong Investor Demand Is Evidence of Growing Confidence
              in Xerox's Significantly Improved Business

Xerox Corporation (NYSE: XRX) completed today a $3.6 billion
recapitalization that includes public offerings of common stock,
3-year mandatory convertible preferred stock and 7-year and 10-year
senior unsecured notes as well as a new $1 billion credit facility.

The credit facility consists of a $700 million revolving facility and
a $300 million term loan, both maturing in September 2008. The company
does not currently intend to draw the revolver on an ongoing basis.

Xerox used net proceeds from the public offerings and the new credit
facility as well as a portion of its current cash balance to prepay
and terminate, effective today, the $3.1 billion outstanding under its
existing bank facility.

The underwriters exercised their 15 percent over-allotment option on
the common stock and preferred stock offerings. As a result, the
company raised $472 million through the sale of 46 million shares of
common stock at $10.25 per share and $920 million through the sale of
9.2 million shares of 3-year mandatory convertible preferred stock at
$100 per share. This preferred stock has an annual dividend yield of
$6.25 per share and a conversion price of up to $12.30.

"The successful completion of this financing is evidence of investors'
confidence in Xerox's solid operations and effective strategy to grow
the business through the industry's broadest portfolio of services and
systems," said Lawrence A. Zimmerman, Xerox senior vice president and
chief financial officer. "Demand for the offerings exceeded initial
expectations, further strengthening Xerox's balance sheet and
providing even more financial and operating flexibility to build on
Xerox's growth initiatives."

The recapitalization also included the sale of $700 million of 7-year
senior unsecured notes due 2010 and bearing interest at 7? percent as
well as $550 million of 10-year senior unsecured notes due 2013 and
bearing interest at 7? percent.

In addition, Xerox's agreement with Citigroup, Deutsche Bank, Goldman
Sachs, JPMorgan, Merrill Lynch and UBS for the new $1 billion credit
facility became effective today. The company noted that the covenants
under the new credit agreement reflect Xerox's improved financial
position. For example, there are no mandatory prepayments and the
interest rate decreased about 2 percentage points under the new credit
facility. It now ranges from 1.75 percent to 3 percent over LIBOR with
an initial rate of 2.75 percent over LIBOR.

Xerox said it expects that its reduced interest expense will largely
offset the dilutive impact of the additional shares in the second half
of this year and in 2004.

For additional information about The Document Company Xerox, please
visit our Worldwide Web site at www.xerox.com/investor.

This release contains forward-looking statements and information
relating to Xerox that are based on our beliefs as well as assumptions
made by and information currently available to us. The words
"anticipate," "believe," "estimate," "expect," "intend," "will" and
similar expressions, as they relate to us, are intended to identify
forward-looking statements. Actual results could differ materially
from those projected in such forward-looking statements. Information
concerning certain factors that could cause actual results to differ
materially is included in the company's Form 10-Q for the quarter
ended March 31, 2003, as filed with the SEC.

XEROX(R), The Document Company(R) and the digital X(R) are trademarks
of XEROX CORPORATION.

   Short Name: Xerox Corporation
   Category Code: MSC
   Sequence Number: 00006360
   Time of Receipt (offset from UTC): 20030626T131519+0100

    --30--tav/ny*

    CONTACT: Xerox Corporation
             James A. Ramsey                                                                 
             Director, Investor Relations                                                    
             203-968-3807                                                                    
             James.Ramsey@usa.xerox.com                                                      
             Fax (203) 968-3944                                                              
             or
             Cynthia B. Johnston         
             Manager, Investor Relations 
             203-968-3489                
             Cindy.Johnston@usa.xerox.com
             Fax (203) 968-3944          

    KEYWORD: UNITED KINGDOM INTERNATIONAL EUROPE
    INDUSTRY KEYWORD: 
    SOURCE: Xerox Corporation

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