Staples 2015 Annual Report Download - page 157

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APPENDIX C
STAPLES C-40
STAPLES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (continued)
The commitments for the asset-based revolving credit facility
will now expire on May 10, 2016 unless prior to that date the
FTC agrees, or a court determines, that the planned merger
is permitted to proceed, in which case the commitments
would be extended to September 10, 2016. The asset-
based revolving credit facility would replace the Company’s
existing $1.0 billion revolving credit facility (see Note F - Debt
and Credit Agreements). The Company’s existing $1.0 billion
revolving credit facility will remain in place if the transaction is
not completed. Amounts outstanding under the asset-based
revolving credit facility will bear interest equal to the one month
London Interbank Offered Rate (“LIBOR”) plus 1.75% for the
first three months, and then ranging from LIBOR plus 1.25%
to 1.75% thereafter depending on the amount of available
borrowing capacity and the amount of outstanding borrowings
and letters of credit. The Company will also pay fees ranging
from 0.25% to 0.375% on the undrawn portion of the credit
facility. Amounts outstanding will be secured by a first-priority
security interest in the Company’s receivables, inventory and
certain other general intangibles and investment property (the
“ABL Collateral”) and a second-priority interest in substantially
all the remaining assets of the Company. Availability under
the asset-based revolving credit facility will be subject to a
borrowing base derived from the ABL Collateral.
The agreements that govern the term loan and that will govern
the asset-based revolving credit facility contain (or are expected
to contain, as applicable) various affirmative and negative
covenants that will, subject to certain significant exceptions,
restrict the Company’s ability to take certain actions, and will
require the Company to maintain certain financial ratios. The
terms of these agreements will limit dividends to $0.15 per
share per quarter, subject to certain exceptions.
The Company expects that the proceeds from the term loan,
borrowings available under the asset-based revolving credit
facility, and cash on hand will be sufficient to finance the
acquisition of Office Depot.