Office Depot Inc, via one of its indirect subsidiaries, has subscribed to a three-month bridging loan to refinance its $735 million non-recourse (‘Timber Notes’) debt obligation.
Depot inherited the Timber Notes debt when it acquired OfficeMax in 2013. For ‘Max, the issue dates back to the sale of its legacy timberland assets in 2004 and the 2008 collapse of Lehman Brothers. Although the non-recourse debt has been more than offset by a receivable since 2012, it has been something that has spooked analysts and investors over the past ten years.
Depot’s bridging loan – which is through a subsidiary called OMX Timber Finance Investments – will allow it to pay off the $735 million non-recourse debt which is due on 31 October. The bridging loan will then run until 29 January 2020 when Office Depot is due to recoup the Timber Note receivable of $817.5 million. Depot confirmed it expects to receive a pre-tax net cash payment of approximately $82.5 million when the loan and receivable mature on this date.
Thereafter, Office Depot will no longer have the Timber Note non-recourse debt on its balance sheet and its CFOs won’t have to field questions on this topic during the company’s quarterly earnings conference calls.
Depot inherited the Timber Notes debt when it acquired OfficeMax in 2013. For ‘Max, the issue dates back to the sale of its legacy timberland assets in 2004 and the 2008 collapse of Lehman Brothers. Although the non-recourse debt has been more than offset by a receivable since 2012, it has been something that has spooked analysts and investors over the past ten years.
Depot’s bridging loan – which is through a subsidiary called OMX Timber Finance Investments – will allow it to pay off the $735 million non-recourse debt which is due on 31 October. The bridging loan will then run until 29 January 2020 when Office Depot is due to recoup the Timber Note receivable of $817.5 million. Depot confirmed it expects to receive a pre-tax net cash payment of approximately $82.5 million when the loan and receivable mature on this date.
Thereafter, Office Depot will no longer have the Timber Note non-recourse debt on its balance sheet and its CFOs won’t have to field questions on this topic during the company’s quarterly earnings conference calls.
