84 Lumber Co. is seeking to borrow $20 million in federal money to help refinance a $45 million loan package at better terms, according to reports today from two western Pennsylvania newspapers.
84 spokesman Jeff Nobers told the Fayette County Herald-Standard and Pittsburgh Tribune-Review newspapers that the $20 million sought under the Community Development Block Program will be combined with $25 million in loans from a private lender and 84 owner Maggie Hardy Magerko to replace a $45 million loan package the company got in 2008 after the housing market crashed. That current loan is with Cerberus Capital Management, an investment fund that also is 55% owner of BlueLinx, the Atlanta-based distributor.
"In 2008, we entered into a loan package with primary lender Cerberus Capital Management and we have been paying that loan down," Nobers told the Herald-Standard. "In fact, we are ahead of schedule. But the issue with those kinds of loans at that point is they are onerous loans. Your ability to do certain things is restricted by the loan. We will have much better terms if we can pay those off and it will give our company a lot more flexibility and liquidity."
The Community Development Block Grant loan will last 17 years and requires interest only for the first two years. 84 qualifies to apply for the loan because "the proposed project will benefit low- and moderate-income people in the creation and retention of jobs," the Tribune-Review wrote. Property that 84 owns will be used as collateral to secure the loans.
The Fayette County Redevelopment Authority, which administers the block grant program, has scheduled a hearing on the request for Wednesday, Aug. 18, in Uniontown, Pa.
84's $1.35 billion in sales last year put it sixth on the latest ProSales 100 list of top LBM operations. A merger higher up the list has since moved it to fifth place. At the start of this year it had just over 300 locations and 4,000 employees; it has about 280 locations now.