NCI Building delays convertibles exchange to negotiate new terms

By Angela McDaniels

Tacoma, Wash., Aug. 27 - NCI Building Systems, Inc. said the planned exchange offer for its 2.125% convertible senior subordinated notes due 2024 has been delayed while it negotiates an amendment to the offer's terms.

Plans for the exchange offer were announced on Aug. 14, and the company had expected to begin the offer on Aug. 28.

Under the amended terms being discussed, holders would receive $500 in cash and 390 shares of common stock for each $1,000 principal amount of notes tendered, according to a company news release.

The company was previously planning to offer $500 in cash and 125 shares for each $1,000 principal amount of notes.

The exchange offer is a condition to an equity investment in the company that Clayton, Dubilier & Rice Fund VIII, LP plans to make. The fund will purchase $250 million of newly issued convertible participating preferred shares.

The greater number of shares to be issued in the exchange offer would reduce Clayton, Dubilier & Rice's as-converted, pro forma ownership position in the company to 68.5% from the 72% stake it would have received prior to the increase.

The amended terms will require a lock-up and voting agreement from holders of more than two-thirds of the outstanding convertibles, and any holders who also hold loans under the company's credit facility will need to agree to support the refinancing of the facility.

Representatives of the noteholder negotiating group have said that holders of a majority of the convertibles are willing to enter into an agreement, NCI said in the release.

Discussions about the amended terms remain ongoing.

Restructuring plan

The company said the equity investment is part of a comprehensive solution to address its significant near-term debt repayment obligations and reduce its debt by $323 million.

The convertibles are putable in November. NCI previously said that if it is not able to renew its revolving credit facility - which was set to mature in June - it will not be allowed to repurchase any convertibles that are put back to it.

Failure to pay on the convertibles would cause the company to be in default under both the notes and the senior secured credit facility and could result in all $473 million of debt outstanding under the agreements to be declared immediately due and payable. NCI said that absent a refinancing, it would be unable to repay this debt.

In addition to the exchange offer, the investment by Clayton, Dubilier & Rice is conditioned on the refinancing of the senior secured credit facility, entry into a new asset-based revolving credit facility and other customary closing conditions.

NCI is a Houston-based integrated manufacturer of metal products for the nonresidential building industry.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.