Office Depot announced Tuesday that it has reached a definitive agreement to offload its 50% stake in its Latin American Joint Venture Office Depot de Mexico to local partner Grupo Gigante.
Gigante will pay $689.8 million for the JV stake, assuming Mexican antimonopoly regulators greenlight the deal. A decision on this is expected within 30 days. OfficeMax has already approved the sale.
After tax, Office Depot expects to net $550 million from the sale, a sum that CFO Mike Newman calls "very attractive." Office Depot plans to then use these funds to redeem the 50% of its convertible preferred shares now owned by private-equity firm BC Partners, and its affiliates, and to also redeem $150 million worth of its bonds, maturing in August.
Newman points out that these actions "will significantly enhance the liquidity position of the combined Company following the planned merger" between Office Depot and OfficeMax.
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