Staples readies launch of $5.75 billion credit facility for Tuesday

By Sara Rosenberg

New York, April 1 – Staples Inc. is scheduled to hold a bank meeting at 11 a.m. ET on Tuesday to launch its proposed $5.75 billion credit facility, according to a market source.

Barclays, Bank of America Merrill Lynch, Wells Fargo Securities LLC and HSBC Securities (USA) Inc. are the bookrunners on the deal.

As previously reported, the facility consists of a $3 billion asset-based five-year revolver and a $2.75 billion six-year senior secured term loan B.

Official price talk on the credit facility is not yet available.

In February, the company disclosed the debt commitment letter in an 8-K filed with the Securities and Exchange Commission, and that letter outlined revolver pricing as Libor plus 150 basis points to 200 bps based on average excess availability and term loan B pricing as Libor plus 375 bps with a 0.75% Libor floor.

The filing also said that the term loan B would have 101 soft call protection for six months.

Proceeds will be used to help fund the acquisition of Office Depot Inc. and to refinance some of the debt of both companies.

Other funds for the transaction will come from $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.

Under the agreement, Office Depot shareholders will receive, for each Office Depot share, $7.25 in cash and 0.2188 of a share in Staples stock at closing. The transaction values Office Depot at an equity value of $6.3 billion.

Closing is expected by year-end, subject to customary conditions, including antitrust regulatory approval and Office Depot shareholder approval.

Staples is a Framingham, Mass.-based retailer of office supplies. Office Depot is a Boca Raton, Fla.-based provider of products, services, and solutions for the workplace.

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