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Court Clears Way For Office Depot Nominees

4/15/2008 03:56:00 PM Eastern

UPDATE! Wilmington, Del. — As a Delaware court cleared the way for dissident investor Alan Levan to nominate two directors to Office Depot’s board, Standard & Poor’s lowered the chain’s credit rating from BB+ to BBB-.

The office supply chain had tried to block Levan’s slate by citing a company bylaw requiring nominating parties to own shares at the time advanced notice was required to be given.

Levan, principal of real estate and investment firm The Woodbridge Group, sued to have the bylaw deemed inapplicable to his proxy fight, and The Delaware Court of Chancery, here, decided to grant the motion.

“We are disappointed by the court's reading of Office Depot's notice of meeting to permit Levan's nominees to stand for election,” the retailer said in a statement. “Regardless of the court’s ruling that Levan's dissident nominees may stand for election, we continue to believe that our stockholders will be best served by rejecting Levan and his nominees. In our opinion, Levan’s nominees are unqualified and would add nothing to our board.”

Office Depot said it is currently reviewing its options in the wake of the ruling. The election is slated for April 23, at the company’s annual meeting.

Separately, CEO Steve Odland expressed disappointment over the decision by Standard & Poor’s Ratings Services (S&P) to lower the company’s credit rating from BB+ to BBB- , and said Office Depot will continue to move forward with its turnaround plan. “Our management team is committed to taking every step necessary to improve the company’s performance. We have a strong turnaround plan in place and we are focused on executing that plan. We believe that we have identified the key growth- and margin-expansion initiatives that we need to succeed and deliver value for all of our constituents, and we believe that we are on track to improve our operating margins by 300 basis points over and above our normalized rate by year-end 2010.”