Staples has $5.75 billion bank financing for Office Depot acquisition

New York, Feb. 4 – Staples, Inc. has arranged $5.75 billion of bank financing commitments to help fund its $6.3 billion acquisition of Office Depot, Inc., according to a news release.

The loans includes a $3 billion ABL credit facility and a $2.75 billion six-year term loan.

Barclays and BofA Merrill Lynch provided the commitments.

Staples expects to draw $1.5 billion of the ABL facility at the closing of the acquisition.

Financing will also include $2.1 billion of stock, $500 million of cash on Staples’ balance sheet and $500 million of Office Depot debt and capital leases that will be rolled over for a total of $7.3 billion of funds, according to an 8-K filing with the Securities and Exchange Commission.

Of this $7.3 billion total, $6.3 billion will be used to purchase Office Depot’s equity, $500 million will be used to roll over Office Depot debt and capital leases, $300 million will be used to refinance Office Depot debt and $400 million will be used for transaction fees, expenses and breakage costs.

Staples said it will maintain its current quarterly dividend of 12 cents per share but will suspend its share repurchase program in order to focus on paying down debt.

The company is “committed to a prudent capital structure that maximizes financial flexibility and supports a balanced and diverse cash deployment strategy, including the resumption of share buybacks over the longer term,” according to the news release.

Staples is a Framingham, Mass., retailer of office supplies.

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