The Company expects to raise up to $205 million of new equity capital by way of a rights offering to its stockholders to purchase common stock at a subscription price of $3.50 per share. The Company intends to use $75 million of the proceeds of the rights offering for general corporate purposes and to use any incremental proceeds to repurchase a portion of its 2012 notes. Holders of the 2012 notes will exchange, at par, their 2012 notes for cash, new notes with an interest rate of LIBOR (subject to a 3.0% floor) plus 1000 basis points that will mature in 2016, or a combination of cash and new notes, subject to proration. To the extent that the gross proceeds of the rights offering are less than $205 million, holders of the 2012 notes will convert a portion of the 2012 notes into common stock at an exchange price equal to the subscription price of the rights offering, as described below.

The transaction will benefit the Company by:

 * providing the Company with significant incremental liquidity to fund
   operations;
 * deleveraging the Company's balance sheet; and
 * extending the maturity of the Company's remaining indebtedness under
   the 2012 notes.

The Company had formed a Special Committee to review a proposal submitted by its two largest stockholders, JLL Partners Fund V, L.P. ("JLL") and Warburg Pincus Private Equity IX, L.P. ("Warburg Pincus"). Robert Griffin, Chairman of the Special Committee, said, in approving the transaction, "We worked hard with our advisors to provide constructive responses to the transaction proposed by JLL and Warburg Pincus, and we are pleased to have agreed upon a structure that allows current stockholders to maintain their ownership while also allowing the Company to improve its liquidity and right size its balance sheet."

Floyd Sherman, the Company's Chief Executive Officer, said, "We appreciate the support of JLL and Warburg Pincus, our largest stockholders, their continued willingness to invest in the future of the Company and their demonstrated faith in our management team. I believe that this transaction is a message to the entire building community that Builders FirstSource has the capacity to withstand the current downturn and is prepared for the anticipated recovery."

Mr. Sherman concluded, "We are optimistic that this transaction will be viewed favorably by our customers, suppliers and employees. We expect the Company to emerge from this downturn in the building market as a stronger and better capitalized competitor."

The Rights Offering

Under the terms of the rights offering, the Company will distribute, at no charge to the holders of its common stock, transferable rights to purchase up to an aggregate of 58,571,428 million new shares of common stock at a subscription price of $3.50 per share. The number of transferable rights to be distributed per share of common stock will be announced when the Company's Board of Directors sets a record date for the rights offering and will be set forth in a registration statement to be filed with the Securities and Exchange Commission ("SEC") and a prospectus distributed to stockholders of record as of the record date. Each whole right will entitle a holder to purchase one share of common stock at the subscription price. Holders of rights (other than JLL Partners Fund V, L.P. and Warburg Pincus Private Equity IX, L.P.) who fully exercise their rights will be entitled to subscribe for and purchase, subject to certain limitations and subject to allotment, additional shares that remain unsubscribed as a result of any unexercised rights (up to the number of shares for which a holder may subscribe under its basic subscription privilege).

JLL and Warburg Pincus, who collectively beneficially own approximately 50% of the Company's common stock, have each agreed to backstop the rights offering for no fee under the terms of an Investment Agreement between the Company, JLL, and Warburg Pincus, by purchasing from the Company, at the subscription price, unsubscribed shares of common stock such that gross proceeds of the rights offering will be $75 million.