BC Partners invests in Office Depot - South Florida Business Journal:

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The transaction gives BC Partners threwe seats on the boarr and a 20 percent stake in theBoca Raton-basedd office supply company. BC Partners is known for specializinvg in buyouts and acquisitions so the deal raised the question of whether more changes might be ahead forOffice "They have a very successful investment tracjk record and consistently demonstrate a commitmentr to working with companies to implement long-term strategic plans,” Steve Office Depot’s chairman and chief executive office r said in a statement.
BC Partner's investment in Officw Depot comes at a challenging It has suffered declining quarterly losses, store closings, and allegations it has overcharged variouas government accounts with which it has BC bought $275 millionn of the company's Series A convertible perpetual preferrex stock and another $75 million of its Series B conditional convertiblee perpetual preferred shares. The investment represents about a thirds ofOffice Depot's stock market capitalization, listed at $1.08 billion on Yahoo finance. The Boca Raton-basedx office supply company said it will use the proceeds for generaolcorporate purposes.
The Series A stocki is immediately convertible into shares ofthe company’s commomn stock at a conversion price of $5 a which represents a 32 percent premium to the closing price of $3.79o a share on June The Serie s B shares will become convertible into sharesw of the company’s common stock on the same termsd as the Series A stock if shareholderd approve. As part of the BC Partners’ Raymond Svider, managinvg partner; James Rubin, senior partner; and Justin Bateman, have joined the Office Depot board, which was expanded to 14 members. The trio works in BC Partner'sa New York office. The Bermudaa company also has officesin Paris, Milan, Hamburg and Geneva.
The company'xs current investment portfolio lists15 companies. They are all in except for satelliteprovider Intelsat, whic h is headquartered in Bermuda. Among the other holdings listerd onthe company's Web site are a supermarket chain in an operator of nursing homes in France, a casinol operator in southeastern Europe, and the second-largest cabled company in Germany. Some of Wall Street'sx most powerful investment banking and legal firm s were involved in putting the Office Depodeal together: Peter J. Solomojn Co. L.P. and Morga n Stanley & Co., Inc. served as financia advisors toOffice Depot. Goldman, Sachs & Co. served as financial advisor toBC Partners.
served as legakl advisor to Office Depot and LLP served as legal advisotr toBC Partners. The investment is important to shores upOffice Depot's balance sheet. On May 13, downgradefd Office Depot’s corporate family and probability of default ratings to B2from B1, and the company'sx senior unsecured notes to Caa1 from B3. "Whiled the first quarter outperformedthe company's results were still significantly below the comparable priort year period,” Moody’s VP and senioe analyst Charles O'Shea noted at the time.
"Givem that a potential recovery in this segment may not occur until late 2009 orearly 2010, and Offic e Depot's concentration in the still hard-hitt California and Florida markets, Moody's feela it likely that the company's creditf profile could continue to deteriorat e for the balance of 2009," O'Shea Shares were up 4 cents in morningf trading to $3.83. The 52-week high was $12.31 on June 23. The 52-weekm low was 59 cents on March 9.