Office Depot flexes $750 million term loan B to Libor plus 700 bps

By Sara Rosenberg

New York, Nov. 2 – Office Depot Inc. increased pricing on its $750 million senior secured term loan B (B1) to Libor plus 700 basis points from talk in the range of Libor plus 500 bps to 525 bps, according to a market source.

Also, the original issue discount on the term loan widened to 97 from 98.5, the call protection was changed to a hard call of 102 in year one and 101 in year two from a 101 soft call for six months, amortization was sweetened to 10% per annum from 5% and the maturity was shortened to five years from six years, the source said.

Other changes included eliminating the MFN sunset, removing the incremental starter basket, revising the excess cash flow sweep to 75% at greater than 0.8 times secured net leverage with step-downs based on leverage, removing all grower baskets, reducing the general restricted payments basket to $10 million from $150 million, cutting the general investment basket to $50 million from $150 million, adding a springing minimum liquidity covenant of $400 million, springing at 1.5 times gross secured leverage, and expanding the collateral to include the Office Depot headquarters, the source continued.

The term loan still has a 1% Libor floor.

Goldman Sachs Bank USA, J.P. Morgan Securities LLC, Bank of America Merrill Lynch and Wells Fargo Securities LLC are the leads on the deal.

Recommitments were scheduled to be due at 5 p.m. ET on Thursday, the source added.

Proceeds will be used to fund the acquisition of CompuCom.

Office Depot is a Boca Raton, Fla.-based provider of office supplies and business products and services.

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