UPDATE 3-BC Partners invests $350 mln in Office Depot

* Private equity firm has around 20 percent stake

* Office Depot has been trying to raise money

* Office Depot shares up about 4 pct

* First U.S.-based investment for BC Partners
(Adds details about BC Partners in paragraphs 2-5, last
paragraph)

SAN FRANCISCO, June 23 (Reuters) - Office Depot Inc
(ODP.N), which has been trying to raise money in the wake of
slumping sales, said on Tuesday it received a $350 million
investment from BC Partners, which could give the London-based
private equity firm a stake of roughly 20 percent in the
retailer.

Private equity firms typically seek to take control of
firms they invest in, but as leverage has been scarce, minority
stake deals have become increasingly common. Boston's Bain
Capital agreed on Monday to buy a stake of up to 23 percent in
China's GOME Electrical Appliances Holdings (0493.HK).

Office Depot marks the first U.S.-based investment BC
Partners has made.

The firm, which has investments in companies such as London
estate agent Foxtons and MiGros, a supermarket chain based in
Turkey, bulked up its U.S. presence in 2008 by creating an
investment team in New York which includes James Rubin from
rival One Equity Partners.

Last year, it made an investment in Bermuda-based Intelsat,
a satellite operator with large operations in the United
States.

Under the Office Depot deal, BC Partners bought $350
million of Office Depot convertible preferred stock that
carries a 10 percent dividend. Office Depot said $275 million
of the preferred stock is immediately convertible into common
stock at $5 per share, a 32 percent premium above Monday's
closing price. The rest is convertible on the same terms upon
shareholder approval.

Office Depot shares were up 16 cents or 4.2 percent at
$3.95 on Tuesday afternoon on the New York Stock Exchange.

The office-supplies retailer has seen sales suffer as small
business owners and retail consumers spend less on supplies
amid the recession, a trend that has also hurt OfficeMax Inc
(OMX.N) and Staples Inc (SPLS.O).

To offset the sales decline, Office Depot has been closing
stores and laying off workers. It has also been exploring ways
to raise money, including selling and then leasing back U.S.
and European properties.

Office Depot CEO Steve Odland said in a statement the deal
"significantly strengthens" its balance sheet and the retailer
will use the proceeds for general corporate purposes.

Office Depot said the BC Partners investment equals an
initial ownership interest of about 20 percent, assuming the
deal is approved by shareholders and the preferred stock is
fully converted into its common stock.

In connection with the investment, Office Depot said
Raymond Svider, James Rubin and Justin Bateman of BC Partners
have joined its board.

Peter J. Solomon Co and Morgan Stanley & Co Inc acted as
financial advisers for Office Depot, while Wachtell, Lipton,
Rosen & Katz served as their legal advisor.

Goldman, Sachs & Co was the financial adviser for BC
Partners, while Latham & Watkins LLP acted as their legal
advisor.

The investment was made out of BC Partners' European
Capital Fund VIII, a 5.9 billion euro fund it finished raising
in 2005, a source familiar with the private equity firm said.
Just over 50 percent of that fund has been invested, the source
said.
(Reporting by Nicole Maestri in San Francisco, Jonathan
Stempel and Megan Davies in New York; editing by John Wallace,
Andre Grenon and Matthew Lewis)