By Paul A. Harris
Portland, Ore., Aug. 15 – Staples Inc. priced its downsized $1 billion issue of eight-year senior notes (B3/B-) at par to yield 8½%, market sources said.
Terms circulated the market early Tuesday morning.
The issue size was decreased from $1.3 billion, after having been previously decreased from $1.6 billion. Of the $600 million reduction in the size of the bond offer, $500 million was shifted to the concurrent term loan.
The yield on the bonds printed 12.5 basis points beyond the wide end of yield talk in the 8¼% area.
BofA Merrill Lynch was the lead bookrunner for the bonds.
Proceeds will be used to help fund the acquisition of Staples by Sycamore Partners.
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.
| Issuer: | Staples Inc.
|
| Amount: | $1 billion, decreased from $1.3 billion
|
| Tenor: | Eight years
|
| Securities: | Senior notes
|
| Lead bookrunner: | BofA Merrill Lynch
|
| Coupon: | 8½%
|
| Price: | Par
|
| Yield: | 8½%
|
| Call protection: | Three years
|
| Settlement date: | Aug. 28
|
| Ratings: | Moody's: B3
|
| S&P: B-
|
| Distribution: | Rule 144A and Regulation S
|
| Price talk: | 8¼% area
|
| Marketing: | Roadshow
|
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