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if validly tendered and not validly withdrawn at or prior to the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.
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For inquiries, please contact publicrelations@staples.com.