Dallas-based pro dealer Builders FirstSource has announced it amended its first-lien term loan agreement with affiliates of Highbridge Principal Strategies to enhance its liquidity position to support both current and anticipated increases in sales volume.
Floyd Sherman, CEO of Builders FirstSource, said in a prepared statement: "Our year-over-year sales growth exceeded 30% in each of the past four quarters, and we currently see no signs of our sales pace slowing. This strong growth prompted us to proactively seek additional liquidity to support our higher working capital requirements. We believe the $93 million of incremental liquidity to be provided by this transaction will enable us to continue growing market share and take further advantage of improving demand for housing."
Material terms of the amendment include:
• Increasing the principal amount by $65 million;
• The additional principal was issued at 95.5%, resulting in approximately $60 million of net cash received after fees and expenses, with no modifications to interest rate and maturity;
• Reducing the minimum cash requirement from $35 million to $15 million;
• Adding a separate $15 million letter of credit (LC) commitment by SunTrust Bank, which is expected to reduce the company's current cash collateral requirement for LC's by approximately $13 million upon satisfaction of certain post-closing conditions; and
• Increasing the minimum specified collateral value to $225 million, contingent upon maintaining certain levels of qualified cash.
Chad Crow, the company’s CFO and senior VP, added: "Our cash usage for fiscal 2012 is expected to be higher than recent guidance due to the increase in working capital necessary to support our higher-than forecasted sales volume, combined with continued commodity lumber and lumber sheet goods price inflation.”
Crow said the LBM chain now expects to end the year with approximately $130 million of cash and $115 million of net liquidity. “Within the next 60 days, we expect an additional $13 million of liquidity to become available upon satisfaction of certain conditions related to our new LC facility," he said