Staples enters five-year $1 billion revolver at Libor plus 110 bps

By Wendy Van Sickle

Columbus, Ohio, Nov. 22 – Staples Inc. entered into a five-year $1 billion revolving credit agreement on Tuesday, according to an 8-K filed with the Securities and Exchange Commission.

The new credit agreement replaces the $1 billion credit agreement dated May 31, 2013 with Bank of America, NA as agent, which was undrawn at closing of the new agreement and was due to expire in May 2018.

Borrowings under the new credit agreement may be drawn in U.S. dollars and alternative currencies, and the loan amount is available for syndicated loans, swingline loans and/or letters of credit.

There is an accordion feature that permits Staples to increase the borrowing limit up to a total of $1.5 billion.

The credit agreement originally matures on Nov. 22, 2021, but the maturity may be extended up to two years.

Interest is Libor plus a spread ranging from 90 basis points to 150 bps, and the facility fee ranges from 10 bps to 25 bps, with both the interest spread and facility fee depending on Staples’ credit rating. Initially the interest spread is 110 bps and the facility fee is 15 bps.

Bank of America Merrill Lynch, Barclays Bank plc, HSBC Securities (USA) Inc., MUFG Union Bank, NA and Wells Fargo Securities, LLC acted as joint lead arrangers and joint bookrunners. Barclays, HSBC USA, NA, MUFG and Wells Fargo Bank, NA acted as co-syndication agents, and Bank of America, NA as administrative agent.

The new credit agreement is unsecured and ranks pari passu with Staples’ public notes and other debt.

Staples must comply with financial covenants that include a minimum ratio of consolidated EBIT plus rental expense to consolidated total interest expense plus rental expense of 1.5 times and a maximum adjusted funded debt to EBITDAR ratio of 3.5 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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