Xerox enters into forward funding agreement with PEAC Solutions

Xerox has entered a Forward Funding Agreement with PEAC Solutions to drive the continued growth of Xerox’s FITTLE business. FITTLE is a global provider of equipment leasing and financing solutions for businesses. PEAC Solutions is a portfolio company of the Asset Value Funds sponsored and managed by leading global investment firm HPS Investment Partners. Under the Forward Funding Agreement, FITTLE has the option to sell eligible pools of lease receivables, which PEAC Solutions is committed to purchase on a monthly basis. FITTLE will continue to service the lease receivables for a specified fee and will be paid a commission on lease receivables sold. The Forward Funding Agreement primarily covers U.S. direct originations and has an initial term of one-year, with automatic one-year extensions thereafter, unless terminated by either party. FITTLE expects to sell lease receivables, which would otherwise have been funded by Xerox, totaling approximately $600M during the initial term. Xerox and FITTLE are exploring similar forward funding arrangements for other portions of FITTLE’s portfolio of future lease receivables, which are expected to provide incremental growth opportunities for the FITTLE origination platform. Xerox expects proceeds from the Forward Funding Agreement to more than offset a use of free cash flow to fund continued year-over-year growth of FITTLE originations in 2023. Xerox coupled this new funding solution with an opportunity to reduce the commitments under its revolving credit facility by 50% and eliminate its quarter-end minimum liquidity requirement. Accordingly, the amendment to Xerox’s credit agreement provides cost savings on the facility, which has never been drawn.