(Source: PRNewswire)
HOUSTON, Aug. 14 /PRNewswire-FirstCall/ -- NCI Building Systems, Inc. (NYSE: NCS) today announced that it has entered into a definitive agreement with Clayton, Dubilier & Rice Fund VIII, L.P. ("the CD&R Fund"), a fund managed by Clayton, Dubilier & Rice, Inc. ("CD&R"), under which the CD&R Fund will invest $250 million in the Company through the purchase of newly issued Convertible Participating Preferred Shares. This investment is part of a comprehensive solution to address NCI's significant near term debt repayment obligations, reduce debt by $323 million and position the Company for future growth.
The CD&R Fund will have a 72% ownership position in the Company on an as-converted, pro-forma basis. NCI Building Systems' Board of Directors has approved the transaction, which is expected to close by the end of the Company's fiscal year.
The equity investment by the CD&R Fund is conditioned upon the completion of the following:
-- The Company has commenced a process to amend its existing $293 million
term loan which will include the repayment of approximately $143 million
and a modification of the terms and maturity of the remaining $150
million of debt.
-- The Company will launch an exchange offer to retire its existing
convertible notes. For each $1,000 note, the Company will offer a
combination of $500 in cash and 125 shares of NCI common stock.
-- The Company is in the final stages of concluding an agreement for a $125
million asset based loan facility ("ABL"), which is not
expected to be drawn at closing.
The Convertible Participating Preferred Shares issued to the CD&R Fund will initially be convertible into approximately 106.8 million shares of common stock at the CD&R Fund's option. Dividends will be payable quarterly either on a cash basis at 8.0% per annum or paid in-kind at 12.0% per annum at the Company's option.
"As a result of this transaction, we will resolve our capital structure issues and gain the flexibility to ride out the current economic crisis and benefit from improved market conditions over the next several years," noted Norman C. Chambers, Chairman, President and CEO of NCI Building Systems. "After many months of exploring a broad range of solutions, we are convinced the CD&R Fund's investment, while unfortunately very dilutive, is in the best interests of our shareholders. In addition to substantially reducing the financial risk that has weighed heavily on the Company, this transaction will allow our shareholders to benefit from ongoing improvements in operating performance driven by our recent restructuring programs as well as the growth opportunities we will have in better economic times."
"CD&R is widely respected as a long term investor and builder of businesses, and will bring both financial and operating resources to our Company. This significant investment serves as a strong endorsement for our business model and growth strategy, as well as our future prospects," Mr. Chambers said.
The Company expects to report a profitable fiscal third quarter ended August 2, 2009 as a result of previously implemented cost reduction programs, and continued pricing discipline. Operating cash flow is expected to be positive. NCI will release its fiscal third quarter results on September 9, 2009.
Nathan K. Sleeper, the CD&R partner leading the transaction, stated, "NCI Building Systems is a clear market leader serving a diverse set of customers and geographies within the nonresidential construction market. We believe that NCI's leading brand position among builders, combined with its unique manufacturing and distribution system, gives the Company a very strong competitive position. We look forward to completing this transaction and working with the strong and experienced NCI management team to build long- term value for the Company's customers, employees and shareholders."
Upon completion of the transaction, the CD&R Fund will appoint directors to the Board in proportion to its aggregate as-converted percentage ownership of common stock. James G.
