OfficeMax Investigates Vendor Claims

Monday, December 20th 2004, 9:47 am
By: News On 6

ITASCA, Ill. (AP) _ OfficeMax Inc. on Monday said it has opened an investigation into claims that OfficeMax inappropriately collected $3.3 million in promotional payments from a vendor during 2003 and 2004.

The office products company said the investigation has only recently begun and as a result the company has decided to delay plans to repurchase between $775 million and $815 million of its common shares, using proceeds from the sale of its paper and forest products business and the conversion of equity purchase units.

OfficeMax said that on Tuesday it will receive about $1.47 billion, before expenses, from monetizing promissory notes received in the sale of the business. The company will retain a residual interest in timber promissory notes of $165 million due in 2019.

The company also said that on Dec. 16, holders of its outstanding 7.50 percent equity security units received 5.41 million newly issued shares of OfficeMax common stock in exchange for cash proceeds of $172.5 million. The settlement rate was 1.5689 shares for each purchase contract. Following the conversion, OfficeMax has approximately 95 million common shares.

OfficeMax said it is investigating claims by a vendor to its retail business ``that certain employees acted inappropriately in requesting promotional payments and in falsifying supporting documentation'' for about $3.3 million in claims billed to the vendor by OfficeMax over the past two years. As a result, the company is postponing plans to use the proceeds from the unit sale and the equity contract conversion to buy back shares until the probe is complete.