Office Depot Refinances Credit Facility, Retires Term Loan

Office Depot Retires Loan, Refinances Facility

In an effort to streamline its capital structure, Office Depot has refinanced its current asset-based credit facility with a new five-year arrangement and has retired its term loan credit agreement due in 2022. The retailer’s new $1.3 billion asset-based credit facility is comprised of a $1.2 billion revolving credit facility in addition to a $100 million first-in, last-out facility, according to an announcement.

Office Depot Chief Executive Officer Gerry Smith said in the announcement, “As validation of our strong financial position and balance sheet, we’ve taken actions to streamline our capital structure by repaying the term loan in full, reducing annual interest expense, and increasing and extending our committed credit facility to 2025.”

Smith continued, “Combined with the $87 million in cash proceeds from the Timber note maturity in January, these actions further simplify our balance sheet and reinforce our liquidity position as we navigate the current environment created by the recent global health crisis that has unfolded in our nation.”

Office Depot borrowed an overall $400 million with the new credit facility at the time of the closing of the deal. Those funds, as well as available cash on hand, were used to pay the rest of the $388 million balance on the term loan and roughly $66 million in other debt.

The retailer foresees saving roughly $14 million in yearly cash interest expense and $75 million in mandated yearly amortization payments by completely removing the term loan. According to the announcement, “The new credit facility was significantly oversubscribed with strong lender support and provides substantial financial flexibility to continue the Company’s transformation efforts.”

In separate news in February, Office Depot was turning its focus to B2B eCommerce to bolster its revenue following disappointing fourth-quarter results. The retailer reportedly aims to harness its strength in serving businesses, healthcare organizations, educational institutions and government agencies. It can service those industries both online and offline via its business solutions division, which provides merchandise and custom procurement offerings in addition to its CompuCom technology division.


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