Staples, Inc. (the “Company”) today announced that it has
commenced an offer to exchange (the “Exchange Offer”) any
and all of the Company’s outstanding 10.75% Senior Notes due 2027
(the “Old Notes”) held by Eligible Holders (as defined
below) for newly issued 12.75% Junior Lien Secured Notes due 2030
(the “Exchange Notes” and the issuance thereof, the
“Exchange Notes Issuance”) to be issued by the Company and
guaranteed by Arch Parent Inc., the parent entity of the Company,
and each of the Company’s existing and future wholly-owned domestic
restricted subsidiaries and, if elected, cash.
In addition, the Company is soliciting consents
(“Consents” and such solicitation the “Consent
Solicitation”) from Eligible Holders of the Old Notes to adopt
certain proposed amendments (the “Proposed Amendments”) to
the indenture governing the Old Notes, dated as of April 16, 2019
(as amended or supplemented from time to time, the “Old Notes
Indenture”), to eliminate substantially all of the restrictive
covenants and certain of the default provisions, modify covenants
regarding mergers and consolidations, and modify or eliminate
certain other provisions, including eliminating any requirement to
provide collateral or guarantees in the future with respect to the
Old Notes.
Substantially concurrently with the Exchange Offer, the Company
expects to (i) consummate a first lien financing (the “New
First Lien Financing”) that, together with certain other
available liquidity, will be used to repay and redeem the Company’s
existing term loan credit facility and 7.500% Senior Secured Notes
due 2026, and pay related fees, costs and expenses (the
“Repayment”) and (ii) amend and extend the maturity of its
existing ABL credit facility (the “ABL Amendment”). In
addition, certain affiliates of the Company (the “Sponsor
Noteholders”) that collectively hold approximately $95 million
in aggregate principal amount of Old Notes as of the date of the
Exchange Offering Memorandum (as defined below) have agreed to
exchange all of their Old Notes for an equivalent aggregate
principal amount of Exchange Notes on the same terms as the
Exchange Notes issued in the Exchange Offer to holders that tender
prior to the Early Exchange Time (as defined below) and do not
elect to receive cash consideration (the “Sponsor
Exchange”).
The Company’s obligation to accept for exchange Old Notes
validly tendered (and not validly withdrawn) pursuant to the
Exchange Offer and related Consent Solicitation is subject to the
satisfaction or, if permitted, waiver of certain conditions set
forth in the confidential offering memorandum and consent
solicitation statement, dated May 9, 2024 (the “Exchange
Offering Memorandum”), including consummation of (i) the ABL
Amendment, (ii) the New First Lien Financing in an amount that, in
the Company’s reasonable judgment and subject to the Company’s
ordinary operational cash needs, together with available liquidity
under existing agreements and other immediately available sources
of cash, provide the Company with aggregate net proceeds sufficient
to effectuate the Repayment and (iii) the Sponsor Exchange;
provided that the Company may not waive the conditions described in
clause (ii) and (iii) above.
The Eligible Holders who have expressed their intention to
participate in the Exchange Offer collectively hold a majority of
the aggregate principal amount of the Old Notes (excluding Old
Notes held by the Sponsor Noteholders) as of the date of the
Exchange Offering Memorandum. Therefore, the Company expects to
have the necessary Consents to adopt the Proposed Amendments,
assuming the consummation of the Exchange Offer and Consent
Solicitation.
The Exchange Offer and the Consent Solicitation will expire at
5:00 P.M., New York City time, on June 7, 2024, unless extended
(such time and date as it may be extended, the “Expiration
Date”), or earlier terminated. Subject to the satisfaction or,
if permitted, waiver of the conditions of the Exchange Offer and
Consent Solicitation described in the Exchange Offering Memorandum,
including the Minimum Participation Condition, the ABL Amendment
Condition, the First Lien Financing Condition and the Sponsor
Exchange Condition (each, as defined in the Exchange Offering
Memorandum), and the tender acceptance procedures described in the
Exchange Offering Memorandum: (i) for each $1,000 principal amount
of Old Notes validly tendered (and not validly withdrawn) at or
prior to 5:00 P.M., New York City time, on May 22, 2024, unless
extended (such time and date with respect to the Exchange Offer, as
the same may be extended, the “Early Exchange Time”) and
accepted for exchange, Eligible Holders of Old Notes will be
eligible to receive the applicable early exchange consideration set
forth in the table below (the “Early Exchange
Consideration”); and (ii) for each $1,000 principal amount of
Old Notes validly tendered after the Early Exchange Time but at or
prior to the Expiration Time and accepted for exchange, Eligible
Holders of Old Notes will be eligible to receive $950 principal
amount of Exchange Notes (the “Late Exchange
Consideration”). Rights to withdraw tendered Old Notes and
revoke Consents terminate at 5:00 P.M. New York City time on May
22, 2024, unless extended (such time and date as it may be
extended, the “Withdrawal Deadline”), except for certain
limited circumstances where additional withdrawal rights are
required by law or as required by the terms of an agreement with
certain Eligible Holders who have agreed to validly tender (and not
validly withdraw) their Old Notes in the Exchange Offer and provide
their Consents to the Proposed Amendments in the Consent
Solicitation. Each Eligible Holder that tenders Old Notes into the
Exchange Offer will be deemed to have given its Consent to the
Proposed Amendments with respect to those tendered Old Notes. No
additional consideration will be paid for Consents. The Early
Exchange Time or the Expiration Date with respect to the Exchange
Offer and Consent Solicitation can be extended independently of the
Withdrawal Deadline for the Exchange Offer and Consent
Solicitation.
The Old Notes will only be accepted for exchange by the Company
in minimum principal amounts of $2,000 and integral multiples of
$1,000 thereafter. The Company will not accept any tender of Old
Notes that would result in the issuance of less than $2,000
principal amount of Exchange Notes, and tenders of $2,000 in
aggregate principal amount will not be eligible to receive cash
consideration payable as part of the First Option of the Early
Exchange Consideration. If, under the terms of the Exchange Offer,
a tendering holder is entitled to receive Exchange Notes in a
principal amount that is not an integral multiple of $1.00, the
Company will round downward such principal amount of Exchange Notes
to the nearest integral multiple of $1.00. This rounded amount will
be the principal amount of Exchange Notes that Eligible Holders
will receive, and no additional cash will be paid in lieu of any
principal amount of Exchange Notes not received as a result of
rounding down.
Each participating Eligible Holder must validly tender (and
not validly withdraw) all of the Old Notes it holds. Partial
tenders of Old Notes will not be accepted.
The following table sets forth the Early Exchange Consideration
and Late Exchange Consideration to be offered to Eligible Holders
of the Old Notes in the Exchange Offer:
Title of Series of Old
Notes
CUSIP No. / ISIN(1)
Aggregate Outstanding
Principal Amount(2)
Early Exchange Consideration,
if validly tendered and not validly withdrawn at or prior to the
Early Exchange Time(3)
Late Exchange Consideration,
if validly tendered after the Early Exchange Time and at or prior
to the Expiration Time(3)
10.75% Senior Notes due 2027
855030AP7 / US855030AP77
U85440AE2 / USU85440AE22
$854,189,000
First
Option:
$1,000, consisting of $883
principal amount of Exchange Notes and $117 in cash(4)
OR
Second
Option: $1,000 principal amount of Exchange Notes
$950 principal amount of Exchange
Notes
________________________________
(1)
No representation is made as to the
correctness or accuracy of the CUSIP numbers or ISINs listed in
this press release, the Exchange Offering Memorandum or printed on
the Old Notes. Such CUSIP numbers and ISINs are provided solely for
the convenience of the Eligible Holders of Old Notes.
(2)
Aggregate outstanding principal amount
excludes principal amount of Old Notes owned by the Sponsor
Noteholders. Including the principal amount of Old Notes owned by
the Sponsor Noteholders, the aggregate outstanding principal amount
of Old Notes as of the date of the Exchange Offering Memorandum is
$949,564,000.
(3)
For each $1,000 principal amount of Old
Notes validly tendered and accepted for exchange, the Issuer will
pay accrued and unpaid interest in addition to the Early Exchange
Consideration or Late Exchange Consideration, as applicable, to,
but excluding, the settlement date for the Exchange Offer (the
“Settlement Date”). Interest on the Exchange Notes will accrue from
the Settlement Date. No consideration will be paid for Consents in
the Consent Solicitation. The Early Exchange Consideration and the
Late Exchange Consideration, as applicable, will be paid on the
Settlement Date.
(4)
For each $1,000 principal amount of Old
Notes validly tendered (and not validly withdrawn) at or prior to
the Early Exchange Time and accepted for exchange, Eligible Holders
of Old Notes that elect the First Option of the Early Exchange
Consideration will be eligible to receive an amount equal to $1,000
consisting of (i) an amount of cash equal to $100.0 million divided
by the aggregate principal amount of Old Notes validly tendered
(and not validly withdrawn) at or prior to the Early Exchange Time
by Eligible Holders that elect such First Option multiplied by
$1,000 plus (ii) an amount of Exchange Notes equal to $1,000 less
the cash consideration amount determined under clause (i) (the
consideration under (i) and (ii) collectively, the “First Option
Consideration”). For the avoidance of doubt, the amount of cash
payable as First Option Consideration will not exceed $1,000 for
each $1,000 principal amount of Old Notes validly tendered (and not
validly withdrawn) at or prior to the Early Exchange Time and
accepted for exchange. The First Option Consideration depicted in
the table above is illustrative only and assumes that all
outstanding Old Notes, other than any Old Notes owned by the
Sponsor Noteholders, are validly tendered (and not validly
withdrawn) at or prior to the Early Exchange Time by Eligible
Holders that elect to receive the First Option Consideration and
that such Old Notes are accepted for exchange. The Early Exchange
Consideration will be impacted on a pro rata basis by participation
levels and elections of the First Option Consideration in the
Exchange Offer at or prior to the Early Exchange Time.
Eligible Holders may not tender their Old Notes without
delivering the related Consents, and Eligible Holders of Old Notes
may not deliver Consents without tendering the related Old Notes.
Old Notes may not be withdrawn from the Exchange Offer and the
related Consents may not be revoked from the Consent Solicitation
after the Withdrawal Deadline, subject to applicable law.
The consummation of each of the Exchange Offer, the Consent
Solicitation and the Exchange Notes Issuance is subject to, and
conditioned upon, the satisfaction or, if permitted, waiver by the
Company of, the Minimum Participation Condition, the ABL Amendment
Condition, the First Lien Financing Condition, the Sponsor Exchange
Condition and the General Conditions; provided that the Company may
not waive the First Lien Financing Condition and the Sponsor
Exchange Condition. Subject to applicable law and except as set
forth above with respect to the First Lien Financing Condition and
the Sponsor Exchange Condition, the Company may amend, extend,
terminate or withdraw the Exchange Offer and/or Consent
Solicitation without amending, extending, terminating or
withdrawing the other, at any time and for any reason, including if
any of the conditions set forth under “Conditions of the Exchange
Offer and Consent Solicitation” in the Exchange Offering Memorandum
with respect to the Exchange Offer is not satisfied as determined
by the Company in its sole discretion.
The Exchange Notes and the offering thereof have not been
registered with the Securities and Exchange Commission under the
Securities Act of 1933, as amended (the “Securities Act”),
or any state or foreign securities laws. The Exchange Offer and
Consent Solicitation will only be made, and the Exchange Notes are
only being offered and issued, to holders of Old Notes that are (a)
reasonably believed to be qualified institutional buyers in
reliance on Rule 144A promulgated under the Securities Act or (b)
non-U.S. persons, in transactions outside the United States, in
reliance on Regulation S under the Securities Act (such holders,
the “Eligible Holders”). Only Eligible Holders are
authorized to receive or review the Exchange Offering Memorandum or
to participate in the Exchange Offer. Copies of all the documents
relating to the Exchange Offer and Consent Solicitation may be
obtained from the Exchange Agent, subject to confirmation of
eligibility through online procedures established by the Exchange
Agent, available at: www.dfking.com/staples. There will be no
letter of transmittal for the Exchange Offer.
Eligible Holders of the Old Notes are urged to carefully read
the entire Exchange Offering Memorandum, including the information
presented under “Risk Factors” and “Special Note Regarding
Forward-Looking Statements” before making any decision with respect
to the Exchange Notes Issuance, the Exchange Offer or the Consent
Solicitation. None of the Company, its subsidiaries, the Exchange
Agent, the Dealer Managers (as defined in the Exchange Offering
Memorandum), the applicable trustees under the indentures governing
the Old Notes and the Exchange Notes, the collateral agent under
the indenture governing the Exchange Notes, or any of their
respective affiliates, makes any recommendation as to whether
holders of Old Notes should participate in the Exchange Notes
Issuance, tender their Old Notes pursuant to the Exchange Offer or
deliver Consents pursuant to the Consent Solicitation. Each
Eligible Holder must make its own decision as to whether to
participate in the Exchange Notes Issuance and whether to tender
its Old Notes and to deliver Consents and, if so, the principal
amount of Old Notes as to which action is to be taken.
D.F. King & Co., Inc. has been appointed as the exchange
agent (the “Exchange Agent”) and information agent for the
Exchange Offer and Consent Solicitation. Questions concerning the
Exchange Offer and the Consent Solicitation may be directed to the
Dealer Managers or the Exchange Agent, in accordance with the
contact details shown on the back cover of the Exchange Offering
Memorandum.
About Staples
For over 35 years, Staples has been a leader in workspace
products and solutions and has thousands of experts who, paired
with the latest technology innovations, help solve problems and
move businesses forward. These experts make work easier, smarter,
and more efficient for businesses of all sizes. The company
operates in North America through eCommerce and direct sales and is
headquartered near Boston, Massachusetts.
No Offer or Solicitation
This press release is not intended to and does not constitute an
offer to sell or the solicitation of an offer to subscribe for or
buy or an invitation to purchase or subscribe for any securities or
the solicitation of any vote, consent or approval in any
jurisdiction in connection with the Exchange Notes Issuance, the
Exchange Offer, the Consent Solicitation, the New First Lien
Financing or any of the other Transactions (as defined in the
Exchange Offering Memorandum), or otherwise, nor shall there be any
sale, issuance or transfer of securities in any jurisdiction in
contravention of applicable law. In particular, this communication
is not an offer of securities for sale into the United States. No
offer of securities shall be made in the United States absent
registration under the Securities Act or pursuant to an exemption
from, or in a transaction not subject to, such registration
requirements.
Cautionary Note Regarding Forward-Looking Statements
Certain statements made herein may be deemed “forward-looking
statements” within the meaning of the Private Securities Litigation
Reform Act of 1995, as amended, including any statements regarding
the consummation of the Exchange Offer, Consent Solicitation, New
First Lien Financing and other Transactions. Any statements that
are not statements of historical fact should be considered
forward-looking statements. These forward-looking statements
generally are identified by the words such as “believes,”
“expects,” “anticipates,” “plans,” “may,” “will,” “would,”
“intends,” “projects,” “plans,” “estimates” or similar expressions
or the negative thereof or other variations thereof or comparable
terminology, or by discussions of strategy, plans or intentions,
involve a number of risks and uncertainties. These forward-looking
statements are based on a series of expectations, estimates,
forecasts and projections, and management’s beliefs and
assumptions. The Company cannot guarantee that it will actually
achieve the plans, intentions or expectations disclosed in the
forward-looking statements. There are a number of important risks
and uncertainties, many of which are beyond our control, that could
cause actual events to differ materially from those indicated by
such forward-looking statements, including, but not limited to, the
adverse impact of failing to consummate the Transactions on our
financial condition, business prospects and the market price of our
securities, the risk that an insufficient number of Eligible
Holders participate in the Exchange Offer and tender their Old
Notes, and diversion of our management’s attention away from our
business on account of the Transactions.
All forward-looking statements included in this press release
are based on information available to the Company as of the date on
which such statements were made and the Company assumes no
obligation to update or revise any forward-looking statements to
reflect events or circumstances that occur after such statements
are made, except as required by law.
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