Staples’ Refinancing $5B Debt Package to Include $2B Term Loan, $2B Secured Bond and $1B Unsecured Bond

Banks including JPMorgan have begun pre-marketing a $5 billion debt refinancing package for office supplies retailer Staples which sources said consists of a $2 billion term loan, $2 billion secured bond and $1 billion unsecured bond.

Staples’ two-part high-yield offering led by JPMorgan consists of a $2 billion secured bond with price talk in the 9% area and a $1 billion unsecured bond in the 12%-12.5% area, according to sources.

One source looking at Staples’ deal said the refinancing has “consumed the sponsor’s focus and bandwidth,” noting that the deal feels opportunistic to the market and that it should come to the market sooner rather than later. They added that while the complex of Staples’ deal is rather large, the company also has many maturities to address. They also pointed out that it could make more sense for the sponsor to upsize the loans and downsize the bond portion, given the benefit of loans in the market right now.

CLO lenders to Staples include Octagon Credit Investors, CIFC Asset Management, MJX Asset Management, Benefit Street Partners and AGL CLO Credit Management, according to Reorg’s CLO Database. The refinancing for Staples could take place in the near term and comes ahead of about $5 billion in 2026 debt maturities faced by the office-supply chain. Below is a capital structure for Staples as of February 2024:

Reorg coverage of Staples from Feb. 28 highlighted management’s stated plans to execute a refinancing in the second half of 2024, noting that a transaction could be brought forward depending on market conditions.

On April 17, Reorg reported on Staples’ fourth-quarter adjusted EBITDA of $254 million, a 9.5% increase from a year earlier, and total revenue of $2.68 billion, up 3.3% from a year earlier.

B3/B- rated Staples was acquired by Sycamore Partners in 2017 for $6.9 billion

Staples’ 7.5% 2026 notes were most recently trading in the secondary today at 97.5 to yield 8.9%, according to MarketAxess. Its TLB 2 maturing in September 2024 was last quoted at 99.49/100.25 on Friday, according to Solve Advisors.

JPMorgan, Sycamore Partners and Staples did not respond to a request for comment.