Sep. 24, 2009 (PR Newswire) -- BEND, Ore., Sept. 24 /PRNewswire/ -- Stadium Capital Management, LLC announced today that it sent a letter to the Special Committee of the Board of Directors of Builders FirstSource, Inc. ("Builders" or the "Company") (NasdaqGS: BLDR) urging rejection of the self-dealing proposal of Warburg Pincus Private Equity IX, L.P. and JLL Partners Fund V, L.P. to, among other things, recapitalize the debt of Builders owned by JLL, Warburg and others, as unfair and unnecessary at the present time. In its letter to the Special Committee, Stadium highlights the serious financial, legal and ethical issues, including that:

    --  The recapitalization proposal is blatantly unfair to the minority
stockholders and represents extraordinary self-dealing by Warburg and
JLL.
--  Builders FirstSource has adequate liquidity at the present time, making
the Recapitalization Proposal unnecessary, and any suggestion to the
contrary by Warburg or JLL is misleading and an attempt to pressure the
Company and the Special Committee into a recapitalization that is
shockingly self-serving to Warburg and JLL.
--  While undoubtedly Builders FirstSource (like most other companies) could
find potentially productive uses for additional capital, nothing about
Builders FirstSource's current circumstances warrants a
recapitalization on terms reflecting the desperation of the
recapitalization proposal - terms that are extraordinarily beneficial to
Warburg and JLL while being commensurately punitive to the minority
stockholders.

--  Warburg and JLL are abusing their position as control stockholders, have
acted contrary to law and are pressuring the Special Committee and the
Company to proceed with this transaction.

Stadium is Builders FirstSource's largest unaffiliated stockholder, beneficially owning, together with its affiliates, approximately 14.9% of the Company's outstanding common stock.

The full text of the letter follows:

September 24, 2009

Members of the Special Committee of the Board of Directors

of Builders FirstSource, Inc.

Robert C. Griffin

Cleveland A. Christophe

Craig A. Steinke

Builders FirstSource, Inc.

2001 Bryan Street, Suite 1600

Dallas, Texas 75201

Gentlemen:

We are the largest unaffiliated stockholder of Builders FirstSource, Inc. ("BLDR" or the "Company") and are writing regarding the unnecessary and self-enriching proposal made by Warburg Pincus Private Equity IX, L.P. ("Warburg") and JLL Partners Fund V, L.P. ("JLL") to the Board of Directors of BLDR to, among other things, recapitalize the debt of BLDR owned by JLL, Warburg and others (the "Recapitalization Proposal"). The Recapitalization Proposal was made to the Company in a letter from Paul S. Levy and Kevin Kruse (both BLDR directors). Stadium Capital Management, LLC is the advisor for four clients (collectively, "Stadium") that own a total of 5,367,140 shares of BLDR common stock, or approximately 14.9% of the Company's outstanding common stock.

Despite our efforts to contact the Special Committee of Independent Directors of BLDR (the "Committee"), we have not been able to speak directly with the members of the Committee. This delay has left Stadium with no recourse but to submit this letter to highlight the serious financial, legal and ethical issues within the Recapitalization Proposal. To be absolutely clear, we urge the Committee to reject this self-dealing Recapitalization Proposal as wholly inappropriate and unwarranted at the present time. We believe:

    --  The Recapitalization Proposal is blatantly unfair to the minority
stockholders and represents extraordinary self-dealing by Warburg and
JLL.
--  BLDR has adequate liquidity at the present time, making the
Recapitalization Proposal unnecessary, and any suggestion to the
contrary by Warburg or JLL is misleading and an attempt to pressure the
Company the Special Committee into a recapitalization that is shockingly
self-serving to Warburg and JLL.
--  While undoubtedly BLDR (like most other companies) could find
potentially productive uses for additional capital, nothing about
BLDR's current circumstances warrants a recapitalization on terms
reflecting the desperation of the Recapitalization Proposal - terms that
are extraordinarily beneficial to Warburg and JLL while being
commensurately punitive to the minority stockholders.

--  Warburg and JLL are abusing their position as control stockholders, have
acted contrary to law and are pressuring the Special Committee and the
Company to proceed with this transaction.

We believe the Recapitalization Proposal is a simple and striking attempt by Warburg and JLL to increase their ownership position substantially at the direct expense of Stadium and the other minority stockholders. We believe that these issues are so obvious, and the terms of the Recapitalization Proposal are so egregious, that we would have hoped that this letter is unnecessary. Our fear, however, is that the Committee is ignoring basic economic realities and true legal requirements and will instead make decisions based on the undue influence of Warburg and JLL, whose motives for the Recapitalization Proposal are clearly questionable. We believe the problems with the Recapitalization Proposal are abundantly clear and see them as follows:

    --  The Recapitalization Proposal reveals the clear conflicts of interest of
Warburg and JLL, and it is shockingly unfair to the minority
stockholders in several respects.

    --  The share price that is proposed for the rights offering and the
exchange offer is unfairly low; indeed, startlingly so and substantially
undervalues the Company.  There can be no rational basis for the
proposed $2.00 per share price, given that BLDR's common stock was
trading in the range of $7.50 to $8.50 per share in the days immediately
preceding the Recapitalization Proposal. We believe there is no proper
business reason for a discount in the range of 75%, as currently
proposed.    We are particularly concerned that the $2.00 share price
was proposed because of the significant benefits it would confer upon
Warburg and JLL in the debt exchange component of their proposal at the
direct expense of other stockholders.
--  Warburg's and JLL's requirement that the proposed rights
offering be "backstopped" by them for a fee of $4.5 million is
also particularly outrageous.  First, it is worth noting that this fee
is in return for a commitment to purchase BLDR stock at discount of
approximately 75% to its market price the day prior to the
Recapitalization Proposal. Second, of the proposed $75 million rights
offering, approximately 50%, or only $37.5 million would be available to
the minority stockholders.  The other $37.5 million would be purchased
by Warburg and JLL.  Accordingly, this "backstop" commitment
would, at first glance, cost the Company a 12% fee ($4.5 million/$37.5
million), which is egregious enough; in reality, when calculated
correctly, this would actually result in Warburg and JLL receiving
stock worth $18 million, a 48% fee, for this valueless backstop ($4.5
million Fee   $2.00 per share = 2,250,000 shares; 2,250,000 shares x
$8.00 per share, BLDR's approximate stock price prior to the
Recapitalization Proposal, = $18 million).  We believe the inclusion of
a backstop requirement in the Recapitalization Proposal is just another
remarkable example of Warburg's and JLL's attempting to
transfer value from the minority stockholders.  We believe any backstop
is unnecessary.