Builders FirstSource (BFS) today announced the completion of a new $160 million first-lien term loan financing agreement with affiliates of Highbridge Principal Strategies that's $10 million bigger than the one it replaces. At the same time, BFS entered into a stand-alone letter of credit (LOC) facility, worth $20 million, with SunTrust Bank. That's the same size as its previous LOC facility.
"This financing transaction strengthens our liquidity and positions us to take full advantage of the expected recovery in housing," CEO Floyd Sherman said. "This financing transaction would not have been possible without the continued improvement in our 2011 financial results."
The term loan was issued at 97% and is secured by a first lien on almost all of BFS' assets. It is guaranteed by all of the company's subsidiaries. The interest rate to be paid is 9.5% plus the 3-month LIBOR (London Interbank Offered Rate) or 2%, whichever is higher. The loan also includes detachable warrants that allow for Highbridge Principal to purchase 1.6 million shares of BFS common stock.
The Dallas-based building material supplier and manufacturer said that with the closing of the term loan, it termined its previous $150 million revolving credit facility.
BFS said it intends to use the proceeds from the new LOC facility to repay the $20 million in outstanding debt under its current revolving credit facility and use $14.2 million to collateralize letters of credit outstanding. The company will use some of the money to pay off fees and other expenses related to the transaction.
The letter of credit facility includes a commitment fee of 0.5% on any unused amount and an interest rate of 2% on any outstanding letters of credit. Both the loan and credit facility mature on Sept. 30, 2015.
The company, ranked No. 9 on the ProSales 100, posted a solid third quarter performance in which it nearly cut its net loss in half, to reach $11.6 million, from the same period a year ago. Net sales grew 20% to $217.2 million. It also marked the third consecutive quarter of improved adjusted EBITDA, which BFS prefers to view its results using. The company reported a negative adjusted EBITDA of $700,000 which is a vast improvement over the $8.3 million hole it was in a year ago.