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Help from a $1B Revolver at Office Depot

Retailer reports a quarterly loss, but wins loan commitments.
Stephen Taub, CFO.com | US
July 30, 2008

Office Depot Inc. amended its revolving credit in the first quarter, and the struggling office-supplies retailer said it had obtained commitments for a fully underwritten facility in excess of $1 billion to be in place by the end of the third quarter.

The amended credit agreement will be collateralized by the company's accounts receivable and inventory in the U.S., along with significant international subsidiaries. The company stressed that, based on current projected operating results, it expects to remain in compliance with all the restrictive covenants. It added, though, that it is seeking a new credit facility to replace its existing facility "given the uncertain economic environment."

The company did not disclose the lender providing the facility.

Meanwhile, Office Depot said that it recently received an unsolicited proposal from its partner in its Mexican joint venture in which the partner proposes to acquire for about $430 million the stock in the joint venture owned by Office Depot. Office Depot added that it has not engaged in substantive discussions with the partner, though it cautioned that there is no assurance that a deal will be completed.

Office Depot also reported a $2 million loss for the second quarter on Wednesday, compared to year-ago earnings of $106 million. The company blamed the overall economic slowdown, especially in Florida and California.




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