By Devika Patel
Knoxville, Tenn., June 23 - Office Depot, Inc. completed a $350 million private placement of its convertible preferred stock on June 23 with funds advised by BC Partners, Inc., according to an 8-K filed Tuesday with the Securities and Exchange Commission.
The Delray Beach, Fla.-based office products and services supplier sold approximately $275 million of its 10% series A redeemable convertible perpetual preferred stock, or 274,596 preferreds, and approximately $75 million of its 10% series B redeemable conditional convertible perpetual preferred stock, or 75,404 preferreds.
The series A preferreds are immediately convertible into common shares at a conversion price of $5.00 per share, a 32% premium. The series B preferreds will become convertible on the same terms as the series A preferreds if shareholders approve the underlying shares.
The initial dividend rate is 10% on both series of preferreds, and dividends are paid quarterly in cash or are added to the liquidation preference, at the company's option.
After three years, the dividend rate on both series of preferreds will decrease to 7.87% if the common stock price is at least $6.62 per share for 20 consecutive trading days. If the share price is at least $8.50 for 20 consecutive trading days, then the dividend will drop to 5.75%.
If shareholder approval for the underlying shares is not obtained within 180 days, the dividend rate on the series B preferreds will increase to 15%. If it is not obtained within 270 days, the dividend rate on the series B preferreds will increase to 17.125%. The series B preferreds' dividend rate will increase to 19% if shareholder approval is not obtained by 360 days.
After three years, the company may redeem both series of preferreds at a 7% premium to the liquidation preference. The premium will decline by 1% each year until there is no premium in year 10 and thereafter.
In addition, after two years, the company may redeem both series of preferreds with no premium if the common stock price is at least $9.75 per share for 20 consecutive trading days.
Proceeds will be used for general corporate purposes.
| Issuer: | Office Depot, Inc.
|
| Issue: | Series A, series B redeemable convertible perpetual preferred stock
|
| Amount: | $350 million
|
| Dividends: | 10%
|
| Warrants: | No
|
| Settlement date: | June 23
|
| Stock symbol: | NYSE: ODP
|
| Stock price: | $3.79 at close June 22
|
| Market capitalization: | $1.1 billion
|
|
|
| Series A
|
| Amount: | $275 million (approximate)
|
| Preferreds: | 274,596
|
| Conversion price: | $5.00
|
| Conversion premium: | 32%
|
|
|
| Series B
|
| Amount: | $75 million (approximate)
|
| Preferreds: | 75,404
|
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