Bison Building Materials, the 14th biggest LBM dealer on the ProSales 100, announced today it filed for Chapter 11 bankruptcy protection from creditors, partly as a result of legacy costs incurred by its failed expansion outside its Houston area core.
Bison's action Sunday at U.S. Bankruptcy Court in Houston makes it the third company in the top 15 of the ProSales 100 to file for Chapter 11 in the past eight weeks, following No. 2 Stock Building Supply on May 6 and then No. 6 Building Materials Holding Corp. on June 16. First-day motions on the filing will be heard Wednesday, chief operating officer Tom Toleson told ProSales.
Bison said in a statement that it is seeking Chapter 11 protection as part of its retrenchment following a period in the late 1900s and earlier this decade in which it sought to move far beyond its Houston base. At its peak it had operations in markets such as Phoenix, Las Vegas (see "Roll of the Dice," ProSales' July 2006 articleydusvvzf on the expansion), and Denver, employing a total of 1,350 people. It reported $403 million in revenues in 2006.
Then came an "excruciatingly swift" housing crash in the markets Bison served, the statement said. The company responded by cutting back to where it now has 556 employees, all in facilities in Houston and in Beaumont, Texas, Tolleson said. According to this year's ProSales 100, by 2008, revenues had fallen to $271 million, a 24.7% drop from 2007's $360 million.
"As Bison adjusted to the national housing market by retrenching back to Houston, it incurred significant legacy costs associated with discontinued operations," Bison said in a statement issued to reporters by Tolleson. "As part of Bison's strategy to maintain market leadership, the company has sought court protection through filing Chapter 11 restructuring."
Tolleson said that, as with Stock, Bison sought Chapter 11 protection in part to get the bankruptcy court to cancel what he described as "significant" real estate and equipment leases associated with the closed locations. But unlike Stock's so-called "prepackaged" filing, designed to get it into and out of Chapter 11 quickly, this one is the more traditional variety.
Bison has arranged debtor in possession financing with its current lender, Wachovia, Tolleson said.
Bison announced its filing in a press release that leads off with the company announcing "its strategy for maintaining market leadership through these challenging economic times."
"Bison has realigned its operations to focus exclusively on lumber distribution and value added products and services including millwork, engineered wood products, pre-manufactured framing products, windows and installed insulation," the announcement continued. "Additionally, Bison has expanded its product offerings to include commercial grade doors and hardware and concrete accessories. Bison remains focused on its key customer base that includes high volume production builders, custom builders, multifamily apartment builders, light commercial builders and the associated trades. Geographically, Bison will continue to focus on its core markets that include the greater Houston area and Beaumont."
The company's two-year restructuring effort is virtually complete, Tolleson told ProSales, adding: "We don't anticipate any further operational adjustments."