BlueLinx plans to begin a rights offering of its common stock that will net $60 million, the company announced today. The proceeds would be used to pay off debt in its credit facility and to fund capital improvements.
Under the terms of the offering, the company will distribute transferable subscription rights to current common stock holders. The offering will allow current stock owners to subscribe for and purchase up to $60 million in stock. The current shareholders are also allowed to oversubscribe for stock. The offering is being backstopped by Cerberus ABP Investor, which owns 55% of BlueLinx. Cerberus will have to purchase the remaining shares of common stock that remain unused at the end of the rights offering. The company will announce the exact date that the offer begins once the Securities and Exchange Commission deems the registration forms effective.
BlueLinx shares opened trading today at $3.77. The share price has fallen over the past year.
The offering may be terminated by BlueLinx should the company's board of directors decide the offering will not net adequate proceeds or they feel there is a better way to make money.
BlueLinx has struggled over the past few years as the company posted a $53.2 million net loss and a $23.9 million operating loss during 2010. The net loss was an improvement from the $61.4 million net loss the company suffered during 2009. Net sales during 2010 were $1.8 billion, up 9% from $1.65 billion in sales in 2009.
Ceberus attempted last year to buy the rest of the shares that it didn't already own but failed to persuade enough shareholders to sell their stock.