Staples launches $1.6 billion unsecured bridge loan to investors

By Sara Rosenberg

New York, July 24 – Staples Inc. held a call on Monday to launch its $1.6 billion unsecured bridge loan to lenders, according to a market source.

Bank of America Merrill Lynch, UBS Investment Bank, Wells Fargo Securities LLC, Credit Suisse Securities (USA) LLC, Deutsche Bank Securities Inc., Fifth Third Bank, Jefferies LLC, RBC Capital Markets, Citigroup Global Markets Inc., Goldman Sachs Bank USA, KKR Capital Markets and Natixis are the leads on the bridge loan, with Bank of America the left lead.

Proceeds will be used to back the buyout of the company by Sycamore Partners for $10.25 per share in cash per share of common stock. The transaction is valued at about $6.9 billion.

Along with the bridge loan, the company has received a commitment for $3.6 billion of credit facilities to help fund the buyout.

The facilities consist of a $2.4 billion term loan and a $1.2 billion ABL facility.

The same banks on the bridge loan are leading the credit facilities, but UBS is the left lead on the term loan and Wells Fargo is the left lead on the ABL facility.

A bank meeting for the credit facilities is expected to take place in early August, the source added.

With the acquisition, there will be an internal reorganization under which the U.S. Retail, Canadian Retail, and North American Delivery business will be separated into stand-alone entities.

The debt financing is for the North American Delivery business, which will have pro forma leverage of around 4 times.

Closing is expected no later than December, subject to customary conditions, including the receipt of regulatory and stockholder approval. The transaction is not subject to a financing condition.

Staples is a Framingham, Mass.-based retailer of office supplies.

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