Staples launches $3.2 billion term loan at Libor plus 475-500 bps

By Sara Rosenberg

New York, March 26 – Staples Inc. launched on Tuesday its $3.2 billion seven-year first-lien term loan with price talk of Libor plus 475 basis points to 500 bps with a 0% Libor floor and an original issue discount of 99, according to a market source.

The term loan has 101 soft call protection for six months and amortization of 1% per annum, the source said.

UBS Investment Bank, Goldman Sachs Bank USA, Bank of America Merrill Lynch, Barclays, Credit Suisse Securities (USA) LLC, Deutsche Bank Securities Inc., Jeffries LLC, KKR Capital Markets, Morgan Stanley Senior Funding Inc. and RBC Capital Markets are the arrangers on the deal, with UBS the left lead and administrative agent.

Commitments are due on April 9, the source added.

Proceeds will be used to help refinance existing debt, including $1 billion of bonds that are expected to be taken out at the make-whole provision under the existing indenture, and to finance a dividend payment.

Other funds for the transaction are expected to come from $750 million of other secured debt and $1,375,000,000 of unsecured debt.

Pro forma adjusted net secured leverage will be 3.5 times, and total net leverage will be 4.7 times.

Staples is a Framingham, Mass.-based business supplies distributor.

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