Associated Materials to place new 15% notes, exchange all 13 5/8% notes, pay down revolver

By Angela McDaniels

Tacoma, Wash., June 16 - Associated Materials, LLC has entered into a number of agreements as part of its plan to optimize its capital structure, according to a company news release.

Notes placement

Under a purchase agreement, the company will issue $20 million of 15% senior subordinated notes due July 15, 2012 in a private placement.

The new 15% notes will rank pari passu with Associated Materials' existing 9¾% senior subordinated notes due 2012, and some of Associated Materials' subsidiaries will provide a guarantee.

The proceeds will be used to repay debt under Associated Materials' revolving credit facility.

Notes exchange

Under an exchange agreement, indirect parent company AMH Holdings II, Inc. will pay $20 million in cash and issue $13.07 million principal amount of new 20% senior notes due Dec. 1, 2014 in exchange for all of its outstanding 13 5/8% senior notes due 2014.

Interest accruing on the new 20% notes will be payable at maturity.

Loans

Under a loan agreement, Associated Materials will loan up to approximately $33 million to AMH Holdings II.

The company also amended its revolver to allow the transactions described above.

The private placement and exchange are subject to some conditions, including that the restricted payments basket under the indenture of AMH Holdings, LLC be increased by at least $8 million through the exchange of debt for equity or the receipt by AMH Holdings II of an equivalent amount of additional equity capital.

The company said the group will continue exploring ways to optimize its capital structure, which could include liability management transactions and/or the refinancing of some debt securities.

Associated Materials is a Cuyahoga Falls, Ohio-based manufacturer of exterior building products.

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