Once it exits Chapter 11, BMHC expects to turn a profit by year end. Story
Building Materials Holding Corporation revealed today (Tuesday) that it has "voluntarily" entered Chapter 11 in U.S. Bankruptcy Court in Delaware, according to a statement issued by the Boise, Idaho-based dealer and construction services provider.
The company, the sixth-largest U.S. LBM dealer, said restructuring under Chapter 11 is part of its agreement with lenders and the company plans to "reduce its outstanding funded debt, establish a new credit facility, and substantially lower annual interest expense upon consummation of the plan."
BMHC joins Stock Building Supply as the second top-10 U.S. dealer to file for bankruptcy protection.
According to BMHC, the company will "continue to operate as usual" during the restructuring process and will continue to honor current commitments to customers. The dealer also noted that all of its locations remain open.
Additionally, BMHC said that it has received backing for $80 million in debtor-in-possession financing from Wells Fargo Bank and other existing lenders. About $40 million will be immediately available to the company upon interim court approval, which is an increase of $20 million from the company's current credit revolver.
The full $80 million will be available to BMHC upon final court approval, the company said.
"We are pleased to have reached an agreement with representatives of our bank group on a plan that will put our company in a stronger financial position for the future," Robert Mellor, chairman and CEO of BMHC, said in the statement issued this morning.
"Their support, and the fact that our new financing is coming from existing lenders, is a sign that our business partners have confidence in our strength as a company and our long term potential," he added.
BMHC has filed "first day" motions, allowing it to continue paying its employees without disruption to their benefits. The company also noted that it does not plan to close any of its facilities or reduce its employee headcount as a result of filing for Chapter 11.
In this year's ProSales 100, BMHC posted the largest sales decline in 2008 of any dealer on the list: down nearly 41% to $1.3 billion. The dealer also slashed about 5,800 jobs last year, about a third of its total workforce.
Earlier this month, BMHC announced it had received a $57 million federal tax refund for 2008. About 70% of the refund is being used to reduce borrowings from BMHC's credit agreement. The remaining 30% was slated to been used in paying off its revolving credit facility and for working capital.
In April, BMHC announced that its lenders agreed to extend through June 29 a waiver that lets it continue to borrow up to $20 million.
BMHC reported that its net loss deepened in the first quarter 2009 to $45.2 million from a net loss of $33.9 million in the same three-month period a year ago. The dealer also reported first quarter sales plummeted 51% to $167 million from sales of $343 million in the first period 2008.
The company consists of its BMC West dealer chain and SelectBuild, a turnkey construction services provider.