Stile/Masonite officials to regroup with bookrunner Deutsche Bank early next week; bond deal still alive

By Paul A. Harris

St. Louis, March 24 - The bond financing that is backing Kohlberg Kravis Roberts & Co.'s acquisition of Mississauga, Ont.-based building products company Masonite International Corp. remains in the market, a syndicate source told Prospect News shortly before the market closed on Thursday.

"The company is going to regroup with the capital markets people on Monday," the source said.

Several market sources had told Prospect News on Wednesday that the company had backed away from its $825 million two-tranche deal due to adverse market conditions.

The syndicate source, speaking before the Thursday early close in the bond market, said that it remained to be determined whether or not the deal would retain its previously heard structure and price talk.

Early in the March 21 week, co-issuers Stile Acquisition Corp. and Masonite International Corp. were in the market with a $300 million tranche of eight-year senior floating-rate notes (B3/B-) that were non-callable for two years. The notes were talked in the Libor plus 325 basis points area. The company also was in the market with a $525 million tranche of 10-year senior subordinated notes (Caa1/B-) that were non-callable for five years. The notes were talked at 9% to 9¼%.

Deutsche Bank Securities, UBS Investment Bank and Scotia Capital are joint bookrunners for the Rule 144A offering.

The bonds, as well a new credit facility, were withdrawn in early February when shareholders turned down Masonite's previous offer for the stock.

Subsequently Masonite amended its agreement with Stile Acquisition Corp., an affiliate of Kohlberg Kravis Roberts & Co., to provide for an increase to C$42.25 per Masonite share, up from C$40.20.

The new offer is scheduled to be presented to shareholders for approval on March 31.

On Thursday the syndicate source said that the acquisition financing is expected to remain in the market pending that March 31 shareholders' vote.

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