Building Materials subsidiary launches tender for ElkCorp notes

By Jennifer Chiou

New York, Feb. 13 - Building Materials Corp. of America subsidiary BMCA Acquisition Sub Inc. began cash tender offers and consent solicitations for all of Elkcorp's $25 million 4.69% senior notes due 2007, $60 million 6.99% senior notes due 2009, $60 million 7.49% senior notes due 2012 and $50 million 6.28% senior notes due 2014.

The company is soliciting consents to eliminate substantially all of the restrictive covenants and some of the events of default contained in the note indentures, according to an 8-K report filed with the Securities and Exchange Commission on Tuesday.

The company and its affiliates previously extended the expiration date of their irrevocable and binding offer to acquire ElkCorp to Feb. 12 from Feb. 6. The tender offers, which expire at 5 p.m. ET on March 23, are linked to the acquisition.

For each $1,000 principal amount of tendered notes, the company said the payout will be based on a fixed spread of 50 basis points over the applicable U.S. Treasury Securities.

Holders who tender will also receive accrued interest up to, but not including, the payment date.

BMCA is seeking tenders from a majority of holders of each series of notes.

Those who tender by the consent deadline of 5 p.m. ET on Feb. 21 will receive the $2.50 consent payment, which is included in the payout.

The offers are conditioned on the execution of amended note purchase agreements and the company receiving a number of shares in the equity tender offer that is at least 90% of ElkCorp's outstanding shares.

As already reported, Building Materials has offered to acquire all of the outstanding common stock of ElkCorp for $43.50 per share.

ElkCorp has notified The Carlyle Group and its affiliates that it intends to terminate its merger agreement with the company and pay a $29 million termination fee. Carlyle had offered to acquire ElkCorp's outstanding common stock for $42.00 per share in cash in a tender offer and second-step merger.

Dallas-based ElkCorp, through its subsidiaries, manufactures roofing and building products.

Building Materials is a provider of construction services and building products based in San Francisco.

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