09:15:25 Today BLDR PRESS RELEASE: Builders FirstSource Announces Rights Offering for
Common Stock and Debt Exchange for Second Priority Senior Secured Floating Rate
Notes Due 2012
Builders FirstSource Announces Rights Offering for Common Stock and Debt
Exchange for Second Priority Senior Secured Floating Rate Notes Due 2012
Holders of 82.8% in Aggregate Principal Amount of 2012 Notes Agree to Support
the Transaction
DALLAS, Oct. 23, 2009 (GLOBE NEWSWIRE) -- Builders FirstSource, Inc.
(Nasdaq:BLDR), a leading supplier and manufacturer of structural and related
building products for residential new construction in the United States, today
announced a $205 million common stock rights offering and debt exchange for its
outstanding Second Priority Senior Secured Floating Rate Notes due 2012 (the
"2012 notes").
The Company expects to raise up to $205 million of new equity capital by way
of a rights offering to its stockholders to purchase common stock at a
subscription price of $3.50 per share. The Company intends to use $75 million
of the proceeds of the rights offering for general corporate purposes and to
use any incremental proceeds to repurchase a portion of its 2012 notes. Holders
of the 2012 notes will exchange, at par, their 2012 notes for cash, new notes
with an interest rate of LIBOR (subject to a 3.0% floor) plus 1000 basis points
that will mature in 2016, or a combination of cash and new notes, subject to
proration. To the extent that the gross proceeds of the rights offering are
less than $205 million, holders of the 2012 notes will convert a portion of the
2012 notes into common stock at an exchange price equal to the subscription
price of the rights offering, as described below.
The transaction will benefit the Company by:
* providing the Company with significant incremental liquidity to fund
operations;
* deleveraging the Company's balance sheet; and
* extending the maturity of the Company's remaining indebtedness under
the 2012 notes.
The Company had formed a Special Committee to review a proposal submitted by
its two largest stockholders, JLL Partners Fund V, L.P. ("JLL") and Warburg
Pincus Private Equity IX, L.P. ("Warburg Pincus"). Robert Griffin, Chairman of
the Special Committee, said, in approving the transaction, "We worked hard with
our advisors to provide constructive responses to the transaction proposed by
JLL and Warburg Pincus, and we are pleased to have agreed upon a structure that
allows current stockholders to maintain their ownership while also allowing the
Company to improve its liquidity and right size its balance sheet."
Floyd Sherman, the Company's Chief Executive Officer, said, "We appreciate
the support of JLL and Warburg Pincus, our largest stockholders, their
continued willingness to invest in the future of the Company and their
demonstrated faith in our management team. I believe that this transaction is a
message to the entire building community that Builders FirstSource has the
capacity to withstand the current downturn and is prepared for the anticipated
recovery."
Mr. Sherman concluded, "We are optimistic that this transaction will be
viewed favorably by our customers, suppliers and employees. We expect the
Company to emerge from this downturn in the building market as a stronger and
better capitalized competitor."
The Rights Offering
Under the terms of the rights offering, the Company will distribute, at no
charge to the holders of its common stock, transferable rights to purchase up
to an aggregate of 58,571,428 million new shares of common stock at a
subscription price of $3.50 per share. The number of transferable rights to be
distributed per share of common stock will be announced when the Company's
Board of Directors sets a record date for the rights offering and will be set
forth in a registration statement to be filed with the Securities and Exchange
Commission ("SEC") and a prospectus distributed to stockholders of record as of
the record date. Each whole right will entitle a holder to purchase one share
of common stock at the subscription price. Holders of rights (other than JLL
Partners Fund V, L.P. and Warburg Pincus Private Equity IX, L.P.) who fully
exercise their rights will be entitled to subscribe for and purchase, subject
to certain limitations and subject to allotment, additional shares that remain
unsubscribed as a result of any unexercised rights (up to the number of shares
for which a holder may subscribe under its basic subscription privilege).
JLL and Warburg Pincus, who collectively beneficially own approximately 50%
of the Company's common stock, have each agreed to backstop the rights offering
for no fee under the terms of an Investment Agreement between the Company, JLL,
and Warburg Pincus, by purchasing from the Company, at the subscription price,
unsubscribed shares of common stock such that gross proceeds of the rights
offering will be $75 million. In addition, to the extent gross proceeds of the
rights offering are less than $205 million, each of JLL and Warburg Pincus has
agreed to exchange up to $48.909 million aggregate principal amount of the 2012
notes indirectly held by it for shares of our common stock at an exchange price
equal to the rights offering subscription price, subject to proration from the
participation of other holders of 2012 notes who exchange their 2012 notes for
shares of our common stock not subscribed for through the exercise of rights in
the rights offering.
The first $75 million of gross proceeds from the rights offering will be used
for general corporate purposes and to pay the expenses associated with the
transaction, and, to the extent gross proceeds of the rights offering exceed
$75 million, those proceeds will be used to repurchase a portion of the
outstanding 2012 notes exchanged in the debt exchange.
The Debt Exchange
Under the terms of the debt exchange, the Company will exchange up to $145
million of newly issued Second Priority Senior Secured Floating Rate Notes due
2016 (the "2016 notes") and up to $130 million in cash from the proceeds of the
rights offering in exchange for its outstanding 2012 notes.
To the extent the Company receives less than $205 million of gross proceeds
from the rights offering, JLL and Warburg will exchange their 2012 notes, and
other participants in the debt exchange will exchange all or a portion of their
2012 notes, for shares of common stock at an exchange price equal to the
subscription price, rather than for the 2016 notes or cash, subject to
proration. To the extent the gross proceeds from the rights offering plus the
aggregate principal amount of any 2012 notes exchanged for common stock do not
equal $205 million, participants in the debt exchange will receive, in exchange
for a portion of their 2012 notes, shares of common stock at an exchange price
equal to the subscription price.
In addition, holders who exchange their 2012 notes in the debt exchange will
consent to amend the indenture under which the 2012 notes were issued to
eliminate certain restrictive covenants and release the liens on the collateral
securing the 2012 notes. Holders of approximately 66 2/3% of the aggregate
principal amount of the 2012 notes, excluding JLL and Warburg Pincus, must
consent to such amendments to the indenture governing the 2012 notes in order
for the amendments to become effective.
The Company has entered into support agreements with the holders of 82.8% of
the aggregate principal amount of the 2012 notes under which such noteholders
have agreed to exchange their 2012 notes in the debt exchange and consent to
the amendments to the indenture governing the 2012 notes.
An agreement in principle was reached to settle the consolidated class and
derivative action lawsuit that was filed in connection with the proposed
transaction.
Consummation of the rights offering and debt exchange is subject to
stockholder approval of the issuance of the shares to be issued in the rights
offering, the backstop commitment, and the debt exchange; the exchange of at
least 95% of the aggregate principal amount of 2012 notes in the debt exchange;
court approval of the agreement to settle lawsuits relating to the transaction;
and other customary closing conditions.
About Builders FirstSource
Headquartered in Dallas, Texas, Builders FirstSource is a leading supplier
and manufacturer of structural and related building products for residential
new construction. The company operates in 9 states, principally in the southern
and eastern United States, and has 55 distribution centers and 51 manufacturing
facilities, many of which are located on the same premises as our distribution
facilities. Manufacturing facilities include plants that manufacture roof and
floor trusses, wall panels, stairs, aluminum and vinyl windows, custom millwork
and pre-hung doors. Builders FirstSource also distributes windows, interior and
exterior doors, dimensional lumber and lumber sheet goods, millwork and other
building products. For more information about Builders FirstSource, visit the
Company's web site at www.bldr.com.
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