Staples firms $2.9 billion term loan spread at Libor plus 400 bps

By Sara Rosenberg

New York, Aug. 15 – Staples Inc. finalized pricing on its $2.9 billion seven-year first-lien term loan (B1/B+) at Libor plus 400 basis points, the high end of revised talk of Libor plus 375 bps to 400 bps and down from initial talk of Libor plus 425 bps, according to a market source.

The term loan still has a 1% Libor floor, an original issue discount of 99.75 and 101 soft call protection for six months.

Earlier in syndication, the term loan was upsized from a revised amount of $2.7 billion and an initial size of $2.4 billion, and the discount was tightened from 99.5.

UBS Investment Bank, Bank of America Merrill Lynch, Deutsche Bank Securities Inc., Credit Suisse Securities (USA) LLC, RBC Capital Markets LLC, Jefferies LLC, Fifth Third Bank, Goldman Sachs Bank USA, Citigroup Global Markets Inc., KKR Capital Markets and Natixis are the bookrunners on the deal.

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

Other funds for the transaction will come from $1 billion in bonds, which were downsized from a revised amount of $1.3 billion and an initial amount of $1.6 billion.

Also, the company is 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.

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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