Staples begins tender offer for Corporate Express' 8¼%, 7 7/8% notes

By Angela McDaniels

Tacoma, Wash., May 22 - Staples, Inc. said it began an all-cash tender offer for the 8¼% senior subordinated notes due 2014 and 7 7/8% senior subordinated notes due 2015 issued by Corporate Express NV subsidiary Corporate Express U.S. Finance Inc.

Staples is conducting the tender offer through its subsidiary, Staples Acquisition BV, in connection with its unsolicited €2.8 billion offer to acquire Corporate Express, which it is carrying out via an €8.00-per-share tender offer for the company's ordinary shares.

Staples Acquisition is also seeking consents to proposed amendments to the note indentures that would eliminate most of the restrictive covenants, some event-of-default provisions and certain other provisions.

Holders who tender must consent to the amendments and vice versa, according to a news release from Staples.

The consent deadline is 5 p.m. ET on June 5, and the tender offer will expire at 11:59 p.m. ET on June 27.

The payout will be determined using the bid-side yield of the 4 7/8% U.S. Treasury note due June 30, 2009 for the 8¼% notes and the 2% U.S. Treasury note due Feb. 28, 2010 for the 7 7/8% notes plus a fixed spread of 50 basis points.

The payout will include a $30.00 consent fee for every $1,000 principal amount of notes tendered by the consent deadline.

Holders will also receive accrued interest up to but excluding the payment date.

The tender offer is conditioned upon, among other things, the receipt of consents from holders of a majority of each series of notes and satisfaction of the conditions to the tender offer for Corporate Express' shares.

Lehman Brothers Inc. (800 438-3242 or 212 528-7581) is dealer manager and solicitation agent, and Georgeson Inc. (866 201-4446) is the information agent.

Staples, an office superstore based in Framingham, Mass., will finance the offers with proceeds from a $3 billion credit agreement with Lehman Brothers Inc., Bank of America and HSBC Bank USA, with cash reserves and with borrowings under its revolving credit facility.

Corporate Express is a business-to-business office supply company based in Amsterdam.

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