Shareholders of Staples Holdings Ltd. are meeting today at the company's annual general meeting to discuss proposals to put the office and medical supply retailer back on a firm financial footing.

In the face of financial difficulties Staples earlier this month halted dividend payments to preferred shareholders. In a statement, the company said the suspension of the semi-annual dividend on the preferred shares -- adding up to $284,784 due March 31 -- was hurting the bottom line. Subsequent dividends were also on hold until further notice.

The board of directors also added that unspecified additional changes would be put up for vote at the annual general meeting.

Trading on Staples shares on the Bermuda Stock Exchange had been suspended pending the announcement. The company requested that the suspension of trading remained in effect while it restructured its operations to deal with its cash flow crunch and loss of market share.

After the company maintained silence on what was going on, The Royal Gazette reported that analysts believed the company could be in talks with creditors.

Staples continues to make monthly payments on its debt to the Bank of Bermuda and the Bank of N.T. Butterfield and Son Ltd. In a previous story The Royal Gazette had referred to the annual report which stated that $364,045 in interest payments to the banks were due on March 31.

By an accounting convention the annual report refers to the payments as a lump sum on the principal. Payments are actually made monthly.

In total, Staples owed about $3.32 million in short and long term loans to the Bank of Bermuda and the Bank Butterfield at September 30.

Staples president Michael Johnson said the company has hired Ernst & Young to assist in the evaluation and re-engineering of the company. The consultants are also in "communication'' with the banks.

"The company is currently in the process of reviewing all its asset values and operational processes, and its financial condition and capital structure, in order to determine the best plan for a complete corporate re-engineering,'' he said.

Company chairman William Midon said more information and changes would be revealed to shareholders at the company's annual general meeting on February 26.