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Borrowing Rate on Term Loan Reduced by 175 Basis Points
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Outstanding Debt Balance Reduced by Approximately $200 Million
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Expect Annual Net Interest Expense Savings of Approximately $21 Million
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Authorized to Repurchase up to $100 Million of Common Stock
BOCA RATON, Fla.--(BUSINESS WIRE)--Nov. 20, 2018--
Office Depot, Inc. (“Office Depot,” or the “Company”) (NASDAQ: ODP), a
leading omni-channel provider of business services and supplies,
products and technology solutions, today announced that it has
successfully repriced its Term Loan Credit Agreement due 2022 (“term
loan”). As part of the repricing, the Company will repay approximately
$200 million of the outstanding term loan, bringing the outstanding
balance to $500 million. In addition, its Board of Directors has
authorized a new stock repurchase program for up to $100 million of its
outstanding common stock beginning January 1, 2019.
“We are pleased that our continued business momentum and strong cash
flow generation has enabled us to negotiate a significant reduction in
annual interest expense,” said Gerry Smith, chief executive officer of
Office Depot. “The strong cash balance that we have built this year also
allows us to utilize a portion of our liquidity position to reduce
outstanding debt and opportunistically repurchase stock in the future,
while still investing in the growth of our business. I’m very pleased
with the transformation that is underway at Office Depot and we remain
committed to our balanced approach to capital allocation and driving
total shareholder returns.”
The Company entered into an amendment to its term loan that reduced the
applicable interest rate margin by 175 basis points to LIBOR plus 525
basis points effective November 21, 2018. All other material provisions
of the term loan remain unchanged. In conjunction with the repricing,
the Company also will make a voluntary repayment under the term loan of
$194 million, reducing the current outstanding principal amount to $500
million. The reduction of applicable interest rate margin and voluntary
repayment are expected to result in net annual interest expense savings
of approximately $21 million in 2019 and $79 million over the remaining
life of the term loan (before transaction-related costs).
As part of the Company’s ongoing commitment to increasing shareholder
value, the Board of Directors has approved a new $100 million stock
repurchase authorization effective January 1, 2019. The new stock
repurchase program will follow the Company’s current program, which
expires on December 31, 2018. As of September 29, 2018, $41 million
remained available for stock repurchases under the current program. The
authorization permits the company to repurchase common stock from
time-to-time through a combination of open market repurchases, privately
negotiated transactions, 10b5-1 trading plans, accelerated stock
repurchase transactions and/or other derivative transactions. The new
stock repurchase program, which extends until the end of 2020, may be
suspended or discontinued at any time. The exact number and timing of
share repurchases will depend on market conditions and other factors,
and will be funded through available cash balances.
About Office Depot, Inc.
Office Depot, Inc. (NASDAQ:ODP) is a leading provider of business
services and supplies, products and technology solutions through its
fully integrated omni-channel platform of approximately 1,400 stores,
online presence, and dedicated sales professionals and technicians to
small, medium and enterprise businesses. Through its banner brands
Office Depot®, OfficeMax®, CompuCom® and Grand&Toy®, the Company offers
its customers the tools and resources they need to focus on their
passion of starting, growing and running their business. For more
information, visit news.officedepot.com and follow @officedepot on
Facebook, Twitter and Instagram.
Office Depot is a trademark of The Office Club, Inc. OfficeMax is a
trademark of OMX, Inc. CompuCom is a trademark of CompuCom Systems, Inc.Grand&Toy is a trademark of Grand & Toy, LLC in Canada. ©2018 Office
Depot, Inc. All rights reserved. Any other product or company names
mentioned herein are the trademarks of their respective owners.
FORWARD LOOKING STATEMENTS
This communication may contain forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995. These
statements or disclosures may discuss goals, intentions and expectations
as to future trends, plans, events, results of operations, cash flow or
financial condition, or state other information relating to, among other
things, Office Depot and share repurchases under the new stock
repurchase program, based on current beliefs and assumptions made by,
and information currently available to, management. Forward-looking
statements generally will be accompanied by words such as “anticipate,”
“believe,” “plan,” “could,” “estimate,” “expect,” “forecast,”
“guidance,” “outlook,” “intend,” “may,” “possible,” “potential,”
“predict,” “project,” “propose” or other similar words, phrases or
expressions, or other variations of such words. These forward-looking
statements are subject to various risks and uncertainties, many of which
are outside of Office Depot’s control. There can be no assurances that
Office Depot will realize these expectations or that these beliefs will
prove correct, and therefore investors and stockholders should not place
undue reliance on such statements.
Factors that could cause actual results to differ materially from those
in the forward-looking statements include, among other things, the risk
that Office Depot is unable to transform the business into a
service-driven company or that such a strategy will result in the
benefits anticipated; the risk that Office Depot may not be able to
realize the anticipated benefits of the CompuCom transaction due to
unforeseen liabilities, future capital expenditures, expenses,
indebtedness and the unanticipated loss of key customers or the
inability to achieve expected revenues, synergies, cost savings or
financial performance; inability to maintain a relevant omni-channel
experience for customers; impact of weather events on Office Depot’s
business; unanticipated changes in the markets for Office Depot’s
business segments; the inability to realize expected benefits from the
disposition of the international operations; fluctuations in foreign
currency exchange rates; changes in credit ratings; risks related to our
indebtedness, including our ability to meet certain financial covenants
in the debt instruments; unanticipated downturns in business
relationships with customers or terms with the Company’s suppliers;
competitive pressures on Office Depot’s sales and pricing; increases in
the cost of material, energy and other production costs, or unexpected
costs that cannot be recouped in product pricing; the introduction of
competing technology products and services; unexpected technical or
marketing difficulties; failure to maintain the security of our
information technology systems, including personally identifiable
information and other data; volatility in the market price for our
stock; unexpected claims, charges, litigation, dispute resolutions or
settlement expenses; new laws, tariffs, policies and governmental
regulations. The foregoing list of factors is not exhaustive. Investors
and stockholders should carefully consider the foregoing factors and the
other risks and uncertainties described in Office Depot’s Annual Report
on Form 10-K for the fiscal year ended December 30, 2017, Quarterly
Reports on Form 10-Q, and Current reports on form 8-K filed with the
U.S. Securities and Exchange Commission. Office Depot does not assume
any obligation to update or revise any forward-looking statements.
View source version on businesswire.com: https://www.businesswire.com/news/home/20181120005137/en/
Source: Office Depot, Inc.
Tim Perrott
Investor Relations
561-438-4629
Timothy.Perrott@officedepot.com
Danny
Jovic
Media Relations
561-438-1594
Danny.Jovic@officedepot.com