Key Takeaways
- • STARTEEPO SICAV, which beneficially owns 7.34% of Xerox Holdings (NASDAQ: XRX) in stocks and options, called Xerox's third-quarter results disappointing and said it will significantly intensify its dialogue with management and the Board.
- • STARTEEPO urged the Board to explore strategic alternatives for Xerox Financial Services (XFS) and potentially Xerox as a whole, offering its transaction advisory, capital markets and European relationship support.
- • The fund proposed a warrant restructuring to enable a debt-for-equity exchange before year-end, arguing lower leverage would outweigh dilution.
- • STARTEEPO has previously estimated Xerox could be worth roughly $3.3 billion, or $18 per share, based on precedent transactions.
- • STARTEEPO backed the suspension of common and preferred dividends and the prioritization of debt reduction, while warning that value could erode without faster deleveraging.
Summary
Prague-based STARTEEPO SICAV a.s., an alternative investment fund that holds 7.34% of Xerox Holdings Corporation (NASDAQ: XRX) in stocks and options, issued a statement on Xerox's third-quarter results, which the company announced the prior day alongside reduced guidance. The fund described the results as disappointing and said it intends to significantly intensify its existing dialogue with management and the Board. STARTEEPO founder and chairman František Bostl said the firm had previously encouraged the Board to take bold action to narrow the gap between Xerox's share price and the value STARTEEPO sees in the company.
STARTEEPO said Xerox must execute more effectively in 2027 and make greater progress on cash flow recovery and deleveraging. It welcomed the company's prioritization of debt reduction and its refinancing efforts, and supported the suspension of common and preferred dividends as a measure to preserve cash. The fund also acknowledged that Xerox responded to its request for greater transparency on Xerox Financial Services (XFS), which finances customer equipment purchases, by providing detailed XFS information in the third-quarter presentation. STARTEEPO described XFS as the "hidden gem" in Xerox's portfolio.
Despite these steps, STARTEEPO called for more aggressive action, including exploring strategic alternatives for XFS and potentially Xerox as a whole, which could run in parallel with operational improvement and debt paydown. It also proposed restructuring outstanding warrants to facilitate a meaningful debt-for-equity exchange before year-end, using proceeds to deleverage. The fund said its own participation in warrant exercises has already helped Xerox retire several million dollars of debt principal, and argued the benefits of lower leverage would outweigh the dilution from additional shares.
STARTEEPO reiterated its view that successful deleveraging would likely lead to a stock re-rating and better position Xerox for industry consolidation. It has previously stated Xerox could be worth roughly $3.3 billion, or $18 per share, based on precedent transactions, and warned that without faster action on deleveraging, operations and strategic alternatives, that value could progressively erode. The statement is an opinion from STARTEEPO and is not investment advice; the fund said it may change its position at any time and that it will continue to evaluate its exposure to Xerox.
STARTEEPO said Xerox must execute more effectively in 2027 and make greater progress on cash flow recovery and deleveraging. It welcomed the company's prioritization of debt reduction and its refinancing efforts, and supported the suspension of common and preferred dividends as a measure to preserve cash. The fund also acknowledged that Xerox responded to its request for greater transparency on Xerox Financial Services (XFS), which finances customer equipment purchases, by providing detailed XFS information in the third-quarter presentation. STARTEEPO described XFS as the "hidden gem" in Xerox's portfolio.
Despite these steps, STARTEEPO called for more aggressive action, including exploring strategic alternatives for XFS and potentially Xerox as a whole, which could run in parallel with operational improvement and debt paydown. It also proposed restructuring outstanding warrants to facilitate a meaningful debt-for-equity exchange before year-end, using proceeds to deleverage. The fund said its own participation in warrant exercises has already helped Xerox retire several million dollars of debt principal, and argued the benefits of lower leverage would outweigh the dilution from additional shares.
STARTEEPO reiterated its view that successful deleveraging would likely lead to a stock re-rating and better position Xerox for industry consolidation. It has previously stated Xerox could be worth roughly $3.3 billion, or $18 per share, based on precedent transactions, and warned that without faster action on deleveraging, operations and strategic alternatives, that value could progressively erode. The statement is an opinion from STARTEEPO and is not investment advice; the fund said it may change its position at any time and that it will continue to evaluate its exposure to Xerox.
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