Staples to fund loan into escrow with extended merger termination date

By Sara Rosenberg

New York, Jan. 20 – Staples Inc. held a lender call at 3 p.m. ET on Wednesday to discuss with lenders plans to fund its term loan B into escrow as the termination date for its pending merger with Office Depot Inc. is being moved to May 16 from Feb. 4, according to a market source.

Under the proposal, the company intends to fund the loan into escrow on Feb. 2.

The funds can stay in escrow until Sept. 10, and the company will have a two-month extension option if the merger has not closed by then, subject to payment of a 25 basis point extension fee, the source said.

If the merger is terminated, lenders will be paid out at par.

Currently, lenders are being paid the full margin plus the floor on the term loan B because of a ticking fee that was part of the transaction when it syndicated in April 2015.

The term loan B is priced at Libor plus 275 bps with a 0.75% Libor floor and was issued at an original issue discount of 99.5.

Barclays is the administrative agent on the debt.

Staples said in a press release that the extension of the merger termination date allows for the completion of ongoing federal district court litigation with the Federal Trade Commission.

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.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.