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Staples cuts talk on $2.75 billion term B to Libor plus 275-300 bps
By Sara Rosenberg
New York, April 20 – Staples Inc. lowered price talk on its $2.75 billion six-year senior secured covenant-light term loan B (Baa2/BBB) to Libor plus 275 basis points to 300 bps from Libor plus 350 bps, according to a market source.
Also, the original issue discount on the term loan B was tightened to 99˝ from 99, the source said.
The term loan still has a 0.75% Libor floor, 101 soft call protection for six months, amortization of 5% per annum and a ticking fee of half the margin starting May 1 and the full margin plus the floor starting June 1.
The company’s $5.75 billion credit facility also includes a $3 billion five-year asset-based revolver.
Commitments are due at 5 p.m. ET on Tuesday.
Barclays, Bank of America Merrill Lynch, Wells Fargo Securities LLC and HSBC Securities (USA) Inc. are the bookrunners on the deal.
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.
Secured leverage is 2.1 times and total leverage is 2.6 times with synergy excluded. Synergy included, secured leverage is 1.4 times and total leverage is 1.8 times.
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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