Staples sets roadshow for $1.3 billion eight-year notes; pricing early Aug. 14 week

By Paul A. Harris

Portland, Ore., Aug. 9 – Staples Inc. plans to start a roadshow on Friday for a $1.3 billion offering of eight-year senior notes (expected ratings B3/B-), according to a sellside source.

The deal is expected to price in the early part of the Aug. 14 week.

BofA Merrill Lynch is helming the offering.

The notes come with three years of call protection.

Proceeds will be used to help fund the acquisition of Staples by Sycamore Partners.

Earlier Wednesday the components of the acquisition financing were resized with $300 million of proceeds shifted to the term loan from the bonds, increasing the loan to $2.7 billion from $2.4 billion, and decreasing the bonds to the present size of $1.3 billion from $1.6 billion.

Sycamore Partners is acquiring Staples for $10.25 in cash per share of common stock. The transaction is valued at about $6.9 billion.

As part of the financing packaging, the company is also getting a $1.2 billion ABL facility for which Wells Fargo is the left lead.

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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