Office Depot amends loan to allow dividends, issuance of convertibles

By Angela McDaniels

Tacoma, Wash., March 30 - Office Depot, Inc. amended its credit facility on Friday to allow it to pay cash dividends on its preferred stock and issue unsecured or subordinated convertible debt securities, according to an 8-K filing with the Securities and Exchange Commission.

The amendment allows the company to make $50 million of certain restricted payments, which includes the dividends, per fiscal year.

As previously reported, the company recorded $15 million of dividends on its convertible preferreds during the fourth quarter of 2009. These dividends, however, had to be paid in kind because the facility did not then allow cash dividends.

The credit facility was also amended to:

• Remove the ability of the company to elect one- or two-month interest periods with respect to its Libor borrowings;

• Allow the company and its subsidiaries to enter into some internal tax restructuring transactions; and

• Waive some technical events of default, including written notice of certain events to the U.S. agent and European agent under the credit agreement and some security agreements.

JPMorgan Chase Bank, NA is the administrative agent.

Office Depot is a Boca Raton, Fla.-based provider of office products and services.

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