Staples now offers term B pricing increase with escrow funding plan

By Sara Rosenberg

New York, Jan. 22 – Staples Inc. has revised its plans to fund its term loan B into escrow so that lenders are now offered an increase in pricing to Libor plus 350 basis points with a 0.75% Libor floor and an original issue discount of 99 from current pricing of Libor plus 275 bps with a 0.75% Libor floor and a discount of 99.5, according to a market source.

In addition, the loan will get 101 soft call protection for one year from the escrow funding date, compared to the 101 soft call protection for six months that was put in place when the loan syndicated in April 2015, the source said.

The escrow proposal is a result of the company extending the termination date for its pending merger with Office Depot Inc. to May 16 from Feb. 4 to allow for the completion of ongoing federal district court litigation with the Federal Trade Commission.

As before, the company intends to fund the loan into escrow on Feb. 2 and the funds can stay in escrow until Sept. 10, with a two-month extension option if the merger has not closed by then, subject to payment of a 25 bps extension fee.

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 deal at the time of syndication.

Barclays is the administrative agent on the debt.

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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