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Staples talks downsized $1 billion eight-year notes at 8¼% area
By Paul A. Harris
Portland, Ore., Aug. 14 – Staples Inc. downsized its offering of eight-year senior notes (B3/B-) to $1 billion from $1.3 billion and talked the notes to yield in the 8¼% area, according to market sources.
The most recent downsizing of the bonds comes on the heels of a decrease to $1.3 billion from $1.6 billion, which took place during the Aug. 7 week.
The deal, which is being led by BofA Merrill Lynch, was expected to price on Monday evening; however, no terms were available at press time.
The notes come with three years of call protection.
Proceeds will be used to help fund the acquisition of Staples by Sycamore Partners.
In conjunction with the $300 million downsizing of the bonds, the concurrent bank loan size was increased by $200 million, to $2.9 billion from $2.7 billion. Proceeds from the earlier downsizing of the bonds were also shifted to the loan.
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 package, 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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