Moody’s: Office Depot loan B1, view positive

Moody's Investors Service said it affirmed all ratings of Office Depot, Inc., including the B1 corporate family rating, and changed the outlook to positive from stable.

A B1 rating was also assigned to the proposed $750 million senior secured term loan due 2023, which will partially fund the proposed purchase of CompuCom Systems, Inc. (Caa2 negative) for total consideration of about $1 billion.

"The change in outlook to positive is driven by Moody's view that there is ample cushion in Office Depot's current rating to absorb this acquisition, which we believe will be additive to its business," Moody's vice president Charlie O'Shea said in a news release.

"CompuCom, with its suite of IT services, is a solid strategic fit, providing Office Depot with a new service offering that will differentiate it from its competition by moving it away from the 'commoditized' portion of the office products and services subsegment of retail."

"Following the rejection by the FTC of its acquisition by Staples, Moody's felt that some meaningful financial policy 'move' would occur, and this acquisition reflects a sensible use of the company's balance sheet," O’Shea added in the release.

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