Demand for shares in the new Staples Holdings Ltd. lifted the initial public offering to oversubscription, the Bank of Bermuda's corporate finance group revealed yesterday.

Applications for about 677,000 shares were received which suggested an oversubscription of the initial public offering of 16 percent, said Mr. Peter Mellor, senior vice president of the Bank of Bermuda and head of the bank's investment division.

A total of 583,334 convertible redeemable voting 10 percent preferred shares were offered to the public at $9 per share with net proceeds estimated at $5.2 million.

"These figures are preliminary since it will take us three to four days to process all the applications,'' said Mr. Mellor.

The oversubscription means some or all of the subscriptions will be reduced at the discretion of the underwriter.

Staples Holdings Ltd. was formed as the holding company of Staples Ltd. and Chips Ltd.

Earlier this year, the two office supply companies announced plans to consolidate under the new holding company with Chips president Mr. William Gresham to receive just under $7 million for the sale of his shares, according to the prospectus.

Mr. William Midon, president of Staples, will become chairman of the new company.

The offering which commenced April 10 closed Wednesday afternoon is being managed by the bank's finance group and underwritten by Bermuda International Securities Ltd., a wholly-owned subsidiary of the bank.

GulfStream Securities Ltd., First Bermuda Securities Ltd., and the Bank of Butterfield acted as sub-underwriters of the IPO while Bermuda Commercial Bank acted as sales agent.

Mr. Gresham's association with Chips, and ultimately with Staples Holdings Ltd., ends with the completion of the public offering.

This is the first merger and simultaneous IPO in Bermuda.

The combined operations of the two companies will result in the largest office equipment and supplies business in Bermuda, excluding office furniture sales.

With an estimated annual revenue of $12.2 million the merger is anticipated to corner 28 percent of Bermuda's $44 million office products market.

The combined operations of Staples, stronger in office supplies than equipment, and Chips, stronger in office equipment than supplies, will result in an estimated pro forma net income of $1.4 million on revenue of $11.6 million for the year ended December 31, 1994.

Management forecasts consolidated revenue will increase by about 24 percent in 1995 to $14.4 million. Management is predicting net income this year of $2.1 million, an increase of 43 percent over last year.

Prior to the end of the year, SHL intends to formally merge the operations of the two companies creating one wholly-owned subsidiary.

Staples Ltd., incorporated in 1991, is the exclusive distributor for Ricoh and 3M products in Bermuda.

Chips was incorporated in 1980 and listed its common shares on the Bermuda Stock Exchange in 1983. The company is the distributor of Sharp products in Bermuda and went public in November, 1993.