| Item 1.01. | Entry into a Material Definitive Agreement. |
Effective November 21, 2018, Office Depot, Inc. (the “Company”) entered into the First Amendment (the “First Amendment”) to its Credit Agreement, dated as of November 8, 2017 (the “Term Loan Credit Agreement”), among the Company, as borrower, the other loan parties party thereto, the lenders party thereto, Goldman Sachs Lending Partners LLC, as administrative agent and collateral agent, the other financial institutions party thereto, and Goldman Sachs Lending Partners LLC as Purchasing Term Lender. The First Amendment amended the Term Loan Credit Agreement to reduce the interest rate applicable to outstanding loans by reducing the margin over the adjusted LIBO Rate applicable to outstanding loans thereunder from 7.00% to 5.25%. All other material provisions of the Term Loan Credit Agreement remain unchanged.
In connection with the applicable interest rate reduction, the Company also made a voluntary repayment under the Term Loan Credit Agreement in the amount of $194 million, reducing the current outstanding principal amount to $500 million. The Company expects the reduction of applicable interest rate margin and voluntary repayment to result in net annual interest expense savings of approximately $21 million in 2019 and $79 million over the remaining life of the term loan (before transaction-related costs).
In connection with the execution of the First Amendment, the Company paid certain fees to the lenders party thereto.
| Item 2.03. | Creation of a Direct Financial Obligation or an Obligation under anOff-Balance Sheet Arrangement of a Registrant. |
The information included under Item 1.01 of this Current Report on Form8-K is incorporated herein by reference.
On November 20, 2018, the Company issued a press release announcing the debt repricing and a new stock repurchase program of up to $100 million of its outstanding common stock, par value $.01 per share (the “Common Stock”) beginning January 1, 2019. The new stock repurchase program will follow the Company’s current program, which expires on December 31, 2018. As of September 29, 2018, $41 million remained available for stock repurchases under the current program. The authorization allows the Company to repurchase Common Stock fromtime-to-time through a combination of open markettransactions,10b5-1 trading plans, accelerated stock repurchase transactions, privately negotiated transactions and/or derivative transactions, subject to certain limitations under the Term Loan Credit Agreement and its asset based credit facility. The new stock repurchase program, which extends until the end of 2020, may be suspended or discontinued at any time. The exact number of shares of Common Stock to be repurchased, if any, and the timing of repurchases will depend on market conditions and other factors, and will be funded through available cash balances. A copy of the Company’s press release is attached hereto as Exhibit 99.1 and incorporated herein by reference.
| Item 9.01. | Financial Statements and Exhibits. |
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