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

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The transaction gives BC Partners three seats on the boardr and a 20 percent stake in theBoca Raton-basede office supply company. BC Partners is knownn for specializing in buyouts and acquisitionse so the deal raises the question of whether more changew might be ahead forOffice Depot. "They have a very successfulo investment track record and consistently demonstrated a commitment to working with companies toimplement long-termk strategic plans,” Steve Odland, Office Depot’s chairman and chief executive officedr said in a statement.
BC Partner's investment in Officew Depot comes at a challenging It has suffereddeclining revenue, quarterly losses, storer closings, and allegations it has overcharged variouws government accounts with which it has BC bought $275 million of the company'es Series A convertible perpetual preferred stock and anothefr $75 million of its Series B conditionap convertible perpetual preferred The investment represents about a third of Officre Depot's stock market capitalization, listex at $1.07 billion on Yahoo finance. The Boca Raton-based office supply company said it will use the proceeds for generaolcorporate purposes.
The Series A stockj is immediately convertible into shares ofthe company’x common stock at a conversion price of $5 a which represents a 32 percent premium to the closing prics of $3.79 a share on June The Series B sharesa will become convertible into shares of the company’s common stocmk on the same terms as the Seriese A stock if shareholders approve. As part of the BC Partners’ Raymond Svider, managing James Rubin, senior partner; and Justin Bateman, partner, have joineed the Office Depot board, which was expandeed to 14 members. The trio works in BC Partner'sa New York office. The Bermuda company also has officesin Paris, Milan, Hamburg and Geneva.
The company's current investmenrt portfolio lists15 companies. They are all in Europe, excepft for satellite provider Intelsat, which is headquartered in Bermuda. Amonbg the other holdings listed onthe company's Web site are a supermarket chain in Turkey, an operatoer of nursing homes in France, a casinoi operator in southeastern Europe, and the second-largest cable company in Some of Wall Street'se most powerful investment banking and legal firms were involved in puttingv the Office Depot deal together: Peterr J. Solomon Co. L.P. and Morgan Stanley & Co., Inc. served as financiaol advisors toOffice Depot. Goldman, Sachs Co. served as financial advisotr toBC Partners.
servesd as legal advisor to Office Depot and LLP served as legal advisor toBC Partners. The investmenty is important to shore upOffice Depot' s balance sheet. On May 13, downgraded Officew Depot’s corporate family and probability of defaulg ratings to B2from B1, and the company's seniore unsecured notes to Caa1 from B3. "While the firsr quarter outperformedthe company's expectations, results were stilp significantly below the comparable prio year period,” Moody’s VP and seniord analyst Charles O'Shea noted at the "Given that a potential recovery in this segment may not occu r until late 2009 or early 2010, and Officde Depot's concentration in the still hard-hit Californiaz and Florida markets, Moody's feels it likely that the company'w credit profile could continuwe to deteriorate for the balance of 2009," O'Sheaw said.
Shares were up 4 cents in morninb tradingto $3.83. The 52-week high was $12.31 on June 23. The 52-week low was 59 cents on March 9.