Builders FirstSource has completed its common stock rights offering and debt exchange for its outstanding Second Priority Senior Secured Floating Rate Notes due 2012.
The exchange raised $180.1 million of new equity capital in the rights offering, which provided stockholders the opportunity to purchase common stock at a price of $3.50 per share, according to a statement issued by Builders FirstSource.
Upon the closing of the rights offering and debt exchange, Builders FirstSource debt was $165 million, of which $20 million consisted of outstanding borrowings under its senior secured revolving credit facility, $139.7 million was indebtedness under 2016 notes, and $5.3 million was indebtedness under remaining 2012 notes. The Company currently has 94,918,918 shares of common stock outstanding.
The Company will use $75 million of the proceeds from the rights offering for general corporate purposes and to pay the expenses of the rights offering and the debt exchange. The remaining $105.1 million of proceeds was used to repurchase a portion of the 2012 notes in the debt exchange, the Dallas-based LBM dealer said.
"Not only did these transactions provide us with substantial additional cash to fund operations, but they enabled us to reduce our debt by $130 million and extend the maturity of most of our remaining debt until 2016," Floyd Sherman, Builders FirstSource CEO said.
"Our cash position upon closing, net of estimated transaction costs, is approximately $142 million," he added.
The cash position excludes a tax refund of $32-34 million that the company expects to receive in the second quarter of 2010.
"I believe these transactions give us one of the strongest balance sheets in the industry and will be viewed very favorably by our customers, suppliers and employees," Sherman said.
In the debt exchange, holders of the 2012 notes exchanged, at par, $269.8 million aggregate principal amount of 2012 notes for $139.7 million aggregate principal amount of new notes with an interest rate of plus 1000 basis points that will mature in 2016, $105.1 million in cash from the proceeds of the rights offering, and 7.1 million shares of Builders FirstSource's common stock.
JLL Partners Fund V, L.P. and Warburg Pincus Private Equity IX, L.P., which owned approximately 24.6% and 24.9%, of the company's common stock prior to the transactions, collectively invested $90 million in Builders FirstSource by each indirectly purchasing more than 12.8 million shares of common stock in the rights offering.
In addition, JLL and Warburg each indirectly acquired more than 2.5 million shares of common stock as part of the consideration for their tender of 2012 notes in the debt exchange. As a result, JLL and Warburg now beneficially own approximately 25.6% and 25.8% of the company's outstanding common stock.
"We really appreciate the continued support of JLL and Warburg Pincus, their substantial investment in the future of our Company and their demonstrated faith in our management team," Sherman said.
Paul Levy, chairman of Builders FirstSource, said, "We believe the Company's management team has done an excellent job in managing through the current industry conditions. We expect that the Company will emerge from this downturn as an aggressive, well-capitalized competitor able to take full advantage of improved market conditions."
Builders FirstSource operates 55 yards and 51 manufacturing facilities in 9 states. The dealer ranked 8th on the latest ProSales 100 listing with total 2008 sales of $1.04 billion.