Office Depot Streamlines Capital Structure by Refinancing Existing Credit Facility and Repaying Term Loan
April 20 2020 - 7:30AM
Business Wire
- Increases Size of Asset-Based Credit Facility up to $1.3
Billion
- Extends Facility Maturity Date to April 2025
- Term Loan Fully Repaid with Combination of New Credit Facility
and Cash on Hand
- Expected Annual Cash Interest and Amortization Savings of
Nearly $90 Million
- Streamlined Capital Structure Preserves Strong Liquidity
Position
Office Depot, Inc. (“Office Depot,” or the “Company”) (NASDAQ:
ODP), a leading provider of business services and supplies,
products and technology solutions, today announced that it has
refinanced its existing asset-based credit facility with a new
five-year agreement (“credit facility”) and retired its Term Loan
Credit Agreement due 2022 (“term loan”).
“As validation of our strong financial position and balance
sheet, we’ve taken actions to streamline our capital structure by
repaying the term loan in full, reducing annual interest expense,
and increasing and extending our committed credit facility to
2025,” said Gerry Smith, chief executive officer of Office Depot.
“Combined with the $87 million in cash proceeds from the Timber
note maturity in January, these actions further simplify our
balance sheet and reinforce our liquidity position as we navigate
the current environment created by the recent global health crisis
that has unfolded in our nation,” he added.
The Company’s new $1.3 billion asset-based credit facility
consists of a $1.2 billion revolving credit facility and a $100
million first-in, last-out (“FILO”) facility. This new credit
facility matures in April 2025 and replaces the Company’s previous
credit facility that was due to expire in May 2021.
Upon closing of the transaction, the Company borrowed a total of
$400 million under the new credit facility. These proceeds, along
with available cash on hand, were used to repay the remaining $388
million balance on the term loan and approximately $66 million in
other debt. By eliminating the term loan in its entirety, the
Company expects to save approximately $14 million in annual cash
interest expense and $75 million in required annual amortization
payments. The new credit facility was significantly oversubscribed
with strong lender support and provides substantial financial
flexibility to continue the Company’s transformation efforts.
About Office Depot, Inc.
Office Depot, Inc. (NASDAQ:ODP) is a leading provider of
business services, products and technology solutions to small,
medium and enterprise businesses, through a fully integrated B2B
distribution platform of approximately 1,300 stores, online
presence, and dedicated sales professionals and technicians.
Through its banner brands Office Depot®, OfficeMax®, CompuCom® and
Grand&Toy®, as well as others, the Company offers its customers
the tools and resources they need to focus on their passion of
starting, growing and running their business. For more information,
visit news.officedepot.com and follow @officedepot on Facebook,
Twitter and Instagram.
Office Depot is a trademark of The Office Club, Inc. OfficeMax
is a trademark of OMX, Inc. CompuCom is a trademark of CompuCom
Systems, Inc. Grand&Toy is a trademark of Grand & Toy, LLC
in Canada. ©2020 Office Depot, Inc. All rights reserved. Any other
product or company names mentioned herein are the trademarks of
their respective owners.
FORWARD LOOKING STATEMENTS
Certain statements in this press release may constitute
“forward-looking statements” within the meaning of the Private
Securities Litigation Reform Act of 1995. These forward-looking
statements relate to a variety of matters, including, without
limitation, statements regarding the company’s financial strength
and liquidity position for the duration of the current global
health crisis and the magnitude of expected savings as a result of
refinancing the existing credit facility and repayment of the term
loan. These forward-looking statements are made on the basis of the
current beliefs, expectations and assumptions of the management of
the Company and are subject to significant risks and uncertainty.
Investors are cautioned not to place undue reliance on any such
forward-looking statements. All such forward-looking statements
speak only as of the date they are made, and the Company undertakes
no obligation to update or revise these statements, whether as a
result of new information, future events or otherwise, except as
may be required by law. These forward-looking statements involve
many risks and uncertainties that may cause actual results to
differ materially from what may be expressed or implied in these
forward-looking statements. Risks and uncertainties that could
affect the forward-looking statements set forth in this press
release include, but are not limited to operational challenges in
achieving the Company’s transformation efforts and executing on the
company's plans, near- and long-term impacts of the COVID-19 virus
outbreak including the impact of the associated economic slowdown,
and the factors generally affecting the business, operations, and
financial condition of the Company, including the information
contained in the Company’s Annual Report on Form 10-K for the year
ended December 28, 2019, subsequent Quarterly Reports on Form 10-Q,
and other reports and filings with the SEC.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200420005236/en/
Tim Perrott
Investor Relations
561-438-4629
Timothy.Perrott@officedepot.com
Danny Jovic
Media Relations
561-438-1594
Danny.Jovic@officedepot.com
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