A spokesperson for Stock Building Supply declined comment Monday, June 23, on a story in the Financial Times newspaper that said Wolseley Plc, Stock's British-based parent, is putting Stock under strategic review.
"We are aware of this article, and as you know, it is Wolseley's policy not to comment on market rumor and speculation," the spokesperson said.
According to the article, which came from the dealReporter news service, an unnamed source said Wolseley "had retained advisers to review North Carolina-headquartered Stock Building Supplies with the intention to sell the business. The source further said that selling Stock could help fend off the necessity for Wolseley to carry out a rights issue. Persistent reports in the press have speculated that Wolseley might need to resort to a cash call because it was in danger of breaching its banking covenants.
Meanwhile, a banker with experience of the U.K, building sector had also heard that the strategic review of the US business was to take place. This banker pointed out that the review was a completely logical step for Wolseley to take given the fact that Stock has been hemorrhaging money," the article continued. For the nine-month period ended April 30, Stock's operating revenue fell 25% from the year-earlier period and it suffered an operating loss of $158 million.
Stock is the second-biggest LBM operation in the United States. It reported to the ProSales 100 sales in 2007 nof $4.7 billion, down 13.2% from 2006. It also said it had 363 locations as of the end of last year (down from 384) and 13,120 employees.