Stock Building Supply emerges from pre-packaged Chapter 11 bankruptcy

By Caroline Salls

Pittsburgh, July 1 - Stock Building Supply Holdings, LLC emerged from Chapter 11 bankruptcy when its plan of reorganization took effect on Wednesday, according to a company news release.

The plan was confirmed by the U.S. Bankruptcy Court for the District of Delaware on June 15, 2009.

"This is a great day for Stock. We are emerging with the strongest balance sheet and financial foundation of any of our competitors," president Joe Appelmann said in the release.

"We are re-focused on our core markets and well-positioned for the upturn in the housing market."

After closing operations in select underperforming markets while under Chapter 11 protection, the company said it is now focused on 19 core markets, including Washington, D.C.; Paradise, Pa.; Richmond, Va.; Raleigh-Durham, Charlotte and Winston-Salem/Greensboro, N.C.; Greenville and Columbia, S.C.; Atlanta; Austin, Amarillo, Houston, Lubbock and San Antonio, Texas; Albuquerque, N.M.; Salt Lake City and Southern Utah; Spokane/Northern Idaho; and Los Angeles.

The company also continues to operate its commercial, flooring and roofing business units.

"We believe the decisions made over the past several weeks have put the company on a path for success," Stock chairman and the Gores Group managing director Timothy Meyer said in the release.

"The proactive steps Stock has taken to address the issues facing our business and the entire homebuilding industry will eliminate uncertainty about our future, an uncertainty that many of our competitors continue to face.

"As a result of recent actions, we're confident the company is now well-positioned to operate profitably in the current environment and capitalize on its full potential."

Under the terms of Stock's recapitalization, Gores has invested $75 million in the company and put in place a $150 million undrawn bank credit facility.

As previously reported, Stock filed for bankruptcy after an affiliate of the Gores Group acquired 51% of the business from Wolseley plc.

Wolseley will retain a 49% interest in the business.

Plan creditor treatment

Specific plan creditor treatment will include:

• Holders of non-priority tax claims and general unsecured claims will recover 100% in cash;

• Holders of secured claims will recover 100%, either through reinstatement of the claim, in cash or through surrender of the collateral securing the claim, at the company's option; and

• Equity interests will be reinstated.

Stock, a Raleigh, N.C.-based supplier of building materials to professional home builders and contractors, filed for bankruptcy on May 6. Its Chapter 11 case number is 09-11554.

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