Xerox: How Did Xerox Consummate the Joint Venture Financing Under the Terms of its Existing Term Loan Facility?

Kevin Grondahl Covenant Analyst - Covenant Review

20 February 2026

Download the Full Report to gain insights on:
  • How Xerox structured its joint venture to potentially circumvent existing credit agreement covenant restrictions.
  • Why the entity may not qualify as a Subsidiary under traditional loan definitions.
  • Which investment baskets and covenant carve-outs enabled the intellectual property transfer to proceed.
  • What this transaction structure means for lender protections in future credit agreements.
  • How creative legal structuring can exploit gaps in standard covenant language and definitions.

The Bottom Line™

Xerox established a joint venture structure to access substantial additional financing capabilities. The company contributed valuable intellectual property assets to a newly formed entity.

Creative legal structuring enabled circumvention of existing credit agreement covenant restrictions and limitations. This arrangement raised significant questions about traditional lender protections in secured facilities.

Traditional subsidiary definitions may not capture this particular joint venture ownership structure. However, the entity appears exempt from negative covenants typically applied to subsidiaries.

Brand-related intellectual property transfers avoided blockers designed to prevent such asset movements. Investment basket capacity provisions enabled the contribution mechanism utilized by the company.

Lenders face challenges addressing this innovative approach in future credit agreement negotiations. Moreover, the transaction structure may influence how secured lending documents define relationships.

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