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Staples, Inc. Announces Early Exchange Results of Exchange Offer for Outstanding 10.75% Senior Notes due 2027 and Consent Solicitation and Changes to the Late Exchange Consideration

May 22, 2024 9:32 PM EDT

FRAMINGHAM, Mass.--(BUSINESS WIRE)-- Staples, Inc. (the “Company”) today announced the early exchange results of the previously announced offer to exchange (the “Exchange Offer”) any and all of the Company’s outstanding 10.75% Senior Notes due 2027 (the “Old Notes”) held by Eligible Holders (as defined below) for newly issued 12.75% Junior Lien Secured Notes due 2030 (the “Exchange Notes” and the issuance thereof, the “Exchange Notes Issuance”) to be issued by the Company and guaranteed by Arch Parent Inc., the parent entity of the Company, and each of the Company’s existing and future wholly-owned domestic restricted subsidiaries and, if elected, cash, as set forth in, and upon the terms and subject to the conditions of, the confidential offering memorandum and consent solicitation statement, dated May 9, 2024 (as supplemented or otherwise modified from time to time, the “Exchange Offering Memorandum”).

As of 5:00 P.M., New York City time, on May 22, 2024 (the “Early Exchange Time”), the Company received from Eligible Holders valid and unwithdrawn tenders and related Consents (as defined below), as reported by D.F. King & Co., Inc. (the “Exchange Agent”), representing $828,900,000 in aggregate principal amount of Old Notes, or approximately 97.0% aggregate principal amount of Old Notes outstanding (excluding Old Notes held by certain affiliates of the Company’s sponsor (collectively, the “Sponsor Noteholders”)), as further specified in the table below.

Title of Series
of
Old Notes

CUSIP No. /
ISIN(1)

Aggregate
Outstanding
Principal Amount(2)

Option
Considerations

Principal
Amount
Tendered by
Early Exchange
Time

Early Exchange
Consideration, if validly
tendered and not validly
withdrawn at or prior to the
Early Exchange Time(3)

10.75% Senior Notes due 2027

855030AP7 / US855030AP77

U85440AE2 / USU85440AE22

$854,189,000

First Option

$823,976,000

$1,000, consisting of approximately $879 principal amount of Exchange Notes and approximately $121 in cash(4)(5)

Second Option

$4,924,000

$1,000 principal amount of Exchange Notes

(1)

No representation is made as to the correctness or accuracy of the CUSIP numbers or ISINs listed in this press release, the Exchange Offering Memorandum or printed on the Old Notes. Such CUSIP numbers and ISINs are provided solely for the convenience of the Eligible Holders of Old Notes.

(2)

Aggregate outstanding principal amount excludes principal amount of Old Notes owned by the Sponsor Noteholders. Including the principal amount of Old Notes owned by the Sponsor Noteholders, the aggregate outstanding principal amount of Old Notes as of the date of the Exchange Offering Memorandum is $949,564,000.

(3)

For each $1,000 principal amount of Old Notes validly tendered and accepted for exchange, the Company will pay accrued and unpaid interest in addition to the Early Exchange Consideration or Late Exchange Consideration (each as defined in the Exchange Offering Memorandum), as applicable, to, but excluding, the settlement date for the Exchange Offer (the “Settlement Date”). Interest on the Exchange Notes will accrue from the Settlement Date. No consideration will be paid for Consents in the Consent Solicitation. The Early Exchange Consideration and the Late Exchange Consideration, as applicable, will be paid on the Settlement Date.

(4)

For each $1,000 principal amount of Old Notes validly tendered (and not validly withdrawn) at or prior to the Early Exchange Time and accepted for exchange, Eligible Holders of Old Notes that elect the First Option of the Early Exchange Consideration were eligible to receive an amount equal to $1,000 consisting of (i) an amount of cash equal to $100.0 million divided by the aggregate principal amount of Old Notes validly tendered (and not validly withdrawn) at or prior to the Early Exchange Time by Eligible Holders that elect such First Option multiplied by $1,000 plus (ii) an amount of Exchange Notes equal to $1,000 less the cash consideration amount determined under clause (i) (the consideration under (i) and (ii) collectively, the “First Option Consideration”). For the avoidance of doubt, the amount of cash payable as First Option Consideration will not exceed $1,000 for each $1,000 principal amount of Old Notes validly tendered (and not validly withdrawn) at or prior to the Early Exchange Time and accepted for exchange.

(5)

The First Option Consideration depicted in the table above is illustrative only. The Exchange Notes will only be issued in minimum principal denominations of $2,000 and integral multiples of $1.00 in excess thereof. The Issuer will not accept any tender of Old Notes that would result in the issuance of less than $2,000 principal amount of Exchange Notes and tenders of $2,000 in aggregate principal amount will not be eligible to receive cash consideration payable as part of the First Option Consideration. If, under the terms of the Exchange Offer and Consent Solicitation, a tendering Eligible Holder is entitled to receive Exchange Notes in a principal amount that is not an integral multiple of $1.00, the Issuer will round downward such principal amount of Exchange Notes to the nearest integral multiple of $1.00. This rounded amount will be the principal amount of Exchange Notes that Eligible Holders will be eligible to receive, and no additional cash will be paid in lieu of any principal amount of Exchange Notes not received as a result of rounding down.

To the extent there are no additional tenders of Old Notes following the Early Exchange Time, and all of the Old Notes validly tendered prior to the Early Exchange Time are accepted for purchase in accordance with the terms of the Exchange Offer, the aggregate principal amount of Exchange Notes to be issued following consummation of the Exchange Offer, including Exchange Notes to be issued to the Sponsor Noteholders in the Sponsor Exchange (as defined in the Exchange Offering Memorandum), will be $824,275,000.

In addition, as of the Early Exchange Time, the Company received the requisite number of consents (the “Consents”) in the concurrent consent solicitation (the “Consent Solicitation”) from Eligible Holders of the Old Notes to adopt certain proposed amendments (the “Proposed Amendments”) to the indenture governing the Old Notes, dated as of April 16, 2019 (as amended or supplemented from time to time, the “Old Notes Indenture”), to eliminate substantially all of the restrictive covenants and certain of the default provisions, modify covenants regarding mergers and consolidations, and modify or eliminate certain other provisions, including eliminating any requirement to provide collateral or guarantees in the future with respect to the Old Notes. On May 22, 2024, the Company entered into a supplemental indenture with the trustee for the Old Notes and the guarantors party thereto to reflect the Proposed Amendments, but the Proposed Amendments will become operative only upon, and subject to, the consummation of the Exchange Offer on the Settlement Date.

Further, the Company is changing the Late Exchange Consideration available to Eligible Holders who validly tender Old Notes after the Early Exchange Time and before the Expiration Time (as defined below). The Late Exchange Consideration will now be the same as the Second Option of the Early Exchange Consideration, such that Eligible Holders who validly tender their Old Notes after the Early Exchange Time and prior to the Expiration Time will receive the same consideration as Eligible Holders who validly tendered (and did not validly withdraw) Old Notes and elected the Second Option prior to the Early Exchange Time, as further set forth in the Exchange Offering Memorandum.

As of 5:00 P.M., New York City time, on May 22, 2024, the right to withdraw tenders of Old Notes and related Consents expired. Accordingly, Old Notes tendered for exchange at or before such time may not be validly withdrawn and Consents may no longer be revoked, unless required by applicable law, or the Company determines in the future in its sole discretion to permit withdrawal and revocation rights.

The Exchange Offer and the Consent Solicitation will expire at 5:00 P.M., New York City time, on June 7, 2024, unless extended or terminated earlier (such time and date as it may be extended or terminated earlier, the “Expiration Time”). Subject to the tender and acceptance procedures described in the Exchange Offering Memorandum, Eligible Holders who validly tender Old Notes after the Early Exchange Time but at or prior to the Expiration Time will receive the Late Exchange Consideration, which will be the same as the Second Option of the Early Exchange Consideration. No consideration will be paid for Consents in the Consent Solicitation. Each participating Eligible Holder must validly tender all of the Old Notes it holds. Partial tenders of Old Notes will not be accepted.

The consummation of each of the Exchange Offer, the Consent Solicitation and the Exchange Notes Issuance is subject to, and conditioned upon, the satisfaction or, if permitted, waiver by the Company of, the Minimum Participation Condition, the ABL Amendment Condition, the First Lien Financing Condition, the Sponsor Exchange Condition and the General Conditions (each as defined in the Exchange Offering Memorandum); provided that the Company may not waive the First Lien Financing Condition and the Sponsor Exchange Condition. Subject to applicable law and except as set forth above with respect to the First Lien Financing Condition and the Sponsor Exchange Condition, the Company may amend, extend, terminate or withdraw the Exchange Offer and/or Consent Solicitation without amending, extending, terminating or withdrawing the other, at any time and for any reason, including if any of the conditions set forth under “Conditions of the Exchange Offer and Consent Solicitation” in the Exchange Offering Memorandum with respect to the Exchange Offer is not satisfied as determined by the Company in its sole discretion.

The Exchange Notes and the offering thereof have not been registered with the Securities and Exchange Commission under the Securities Act of 1933, as amended (the “Securities Act”), or any state or foreign securities laws. The Exchange Offer and Consent Solicitation will only be made, and the Exchange Notes are only being offered and issued, to holders of Old Notes that are (a) reasonably believed to be qualified institutional buyers in reliance on Rule 144A promulgated under the Securities Act or (b) non-U.S. persons, in transactions outside the United States, in reliance on Regulation S under the Securities Act (such holders, the “Eligible Holders”). Only Eligible Holders are authorized to receive or review the Exchange Offering Memorandum or to participate in the Exchange Offer. Copies of all the documents relating to the Exchange Offer and Consent Solicitation may be obtained from the Exchange Agent, subject to confirmation of eligibility through online procedures established by the Exchange Agent, available at: www.dfking.com/staples. There will be no letter of transmittal for the Exchange Offer.

Eligible Holders of the Old Notes are urged to carefully read the entire Exchange Offering Memorandum, including the information presented under “Risk Factors” and “Special Note Regarding Forward-Looking Statements” before making any decision with respect to the Exchange Notes Issuance, the Exchange Offer or the Consent Solicitation. None of the Company, its subsidiaries, the Exchange Agent, the Dealer Managers (as defined in the Exchange Offering Memorandum), the applicable trustees under the indentures governing the Old Notes and the Exchange Notes, the collateral agent under the indenture governing the Exchange Notes, or any of their respective affiliates, makes any recommendation as to whether holders of Old Notes should participate in the Exchange Notes Issuance, tender their Old Notes pursuant to the Exchange Offer or deliver Consents pursuant to the Consent Solicitation. Each Eligible Holder must make its own decision as to whether to participate in the Exchange Notes Issuance and whether to tender its Old Notes and to deliver Consents and, if so, the principal amount of Old Notes as to which action is to be taken.

D.F. King & Co., Inc. has been appointed as the exchange agent and information agent for the Exchange Offer and Consent Solicitation. Questions concerning the Exchange Offer and the Consent Solicitation may be directed to the Dealer Managers or the Exchange Agent, in accordance with the contact details shown on the back cover of the Exchange Offering Memorandum.

About Staples

For over 35 years, Staples has been a leader in workspace products and solutions and has thousands of experts who, paired with the latest technology innovations, help solve problems and move businesses forward. These experts make work easier, smarter, and more efficient for businesses of all sizes. The company operates in North America through eCommerce and direct sales and is headquartered near Boston, Massachusetts.

No Offer or Solicitation

This press release is not intended to and does not constitute an offer to sell or the solicitation of an offer to subscribe for or buy or an invitation to purchase or subscribe for any securities or the solicitation of any vote, consent or approval in any jurisdiction in connection with the Exchange Notes Issuance, the Exchange Offer, the Consent Solicitation, the New First Lien Financing or any of the other Transactions (as defined in the Exchange Offering Memorandum), or otherwise, nor shall there be any sale, issuance or transfer of securities in any jurisdiction in contravention of applicable law. In particular, this communication is not an offer of securities for sale into the United States. No offer of securities shall be made in the United States absent registration under the Securities Act or pursuant to an exemption from, or in a transaction not subject to, such registration requirements.

Cautionary Note Regarding Forward-Looking Statements

Certain statements made herein may be deemed “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, as amended, including any statements regarding the consummation of the Exchange Offer, Consent Solicitation, New First Lien Financing and other Transactions. Any statements that are not statements of historical fact should be considered forward-looking statements. These forward-looking statements generally are identified by the words such as “believes,” “expects,” “anticipates,” “plans,” “may,” “will,” “would,” “intends,” “projects,” “plans,” “estimates” or similar expressions or the negative thereof or other variations thereof or comparable terminology, or by discussions of strategy, plans or intentions, involve a number of risks and uncertainties. These forward-looking statements are based on a series of expectations, estimates, forecasts and projections, and management’s beliefs and assumptions. The Company cannot guarantee that it will actually achieve the plans, intentions or expectations disclosed in the forward-looking statements. There are a number of important risks and uncertainties, many of which are beyond our control, that could cause actual events to differ materially from those indicated by such forward-looking statements, including, but not limited to, the adverse impact of failing to consummate the Transactions on our financial condition, business prospects and the market price of our securities, the risk that an insufficient number of Eligible Holders participate in the Exchange Offer and tender their Old Notes, and diversion of our management’s attention away from our business on account of the Transactions.

All forward-looking statements included in this press release are based on information available to the Company as of the date on which such statements were made and the Company assumes no obligation to update or revise any forward-looking statements to reflect events or circumstances that occur after such statements are made, except as required by law.

For inquiries, please contact [email protected].

Source: Staples, Inc.



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