Jeld-Wen has decided to wait to offer $575 million worth of bonds until markets become stronger, according to an article by Bloomberg.
Teri Cline, Jeld-Wen's director of communication said in an e-mail to ProSales that the window and door manufacturer is pre-marketing its bonds and it has not attempted to price or sell the bonds yet. Standard & Poor's gave the bonds a preliminary-level rating of CCC+ to the bonds and a 'B-' preliminary corporate credit rating to the Klamath Falls, Ore.-based company.
In its report, S&P said that Jeld-Wen's ratings were greatly impacted by its involvement in the residential construction industry and has thin operating margins. S&P did, however, said the company "maintains a leading position in residential doors in North America, Europe, and Australia." The rating agency predicts Jeld-Wen will likely show none to little improvement in the coming quarters."
The $575 million in secured notes is part of the company's investment agreement with Onex Corp., which will invest $864 million and take over a 58% stake in Jeld-Wen once the transaction is completed. The company is currently $1.2 billion in debt. Cline said the transaction is still on track and both sides are dedicated to finishing it before the end of the third quarter.
The CCC+ rating, which refers the bonds to "junk" status, has sparked controversy as to what the future holds to Jeld-Wen. The Oregonian, a Portland, Ore.-based newspaper, published an article on Sept. 2 saying the rating jeopardized the Onex deal and could point Jeld-Wen towards bankruptcy.
Cline, however, called the article "misleading" and "based on a false premise." According to Cline, the company is not facing bankruptcy and has more than enough cash needed to conduct "business as usual."
