Griffon may de-lever via cash from divestiture, taps 2022 notes in Q4

By Devika Patel

Knoxville, Tenn., Nov. 16 – Griffon Corp. could use the proceeds from a planned divestiture to deleverage its balance sheet.

On Thursday, Griffon said it plans to sell Clopay Plastic Products Co. to Berry Global Group, Inc. for $475 million in cash. The transaction is expected to close within the first calendar quarter of 2018.

“The divestiture of Plastics will unlock value for Griffon shareholders,” chief executive officer Ronald J. Kramer said on the company’s fourth quarter earnings and year ended Sept. 30 conference call on Thursday.

“After the Plastics transaction closes, we’ll evaluate the use of proceeds which should provide a substantial amount of liquidity to either invest in opportunities that diversify Griffon’s portfolio of companies, deleverage our balance sheet and/or return capital to Griffon shareholders.”

Although the company may deleverage, it does not have specific plans to do so.

“We have no current intentions with deleveraging,” Kramer said.

During the fourth quarter, Griffon priced an upsized $275 million add-on to its 5¼% senior notes due March 1, 2022 (B+/B+) at 101 in a quick-to-market Sept. 27 trade.

“On Oct. 2, we closed on a $275 million add-on offering of our 5¼% senior notes due 2022,” Kramer said.

“We saw significant demand for the offering and were able to upsize it from its originally announced $200 million offering.

“We used the proceeds to finance the ClosetMaid acquisition and reduce our outstanding revolver balance,” he said.

The issue size was increased from $200 million and Deutsche Bank Securities Inc. managed the sale.

The New York-based diversified management and holding company said at the time that it planned to use the proceeds to finance substantially all of its acquisition of entities and assets of the ClosetMaid business from Emerson Electric Co.

At Sept. 30, the company had cash and equivalents of $48 million, total debt outstanding of $979 million and $192 million available for borrowing under its revolving credit facility.

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