CUYAHOGA FALLS, Ohio — Associated Materials, a manufacturer and distributor of exterior building products with over $1.3 billion in annual sales, has entered into definitive agreements for a series of recapitalization transactions that the company says will significantly de-lever its balance sheet and enhance its liquidity position.
“Under the transactions, holders of over 99% of the company’s $675.0 million 9.00% senior secured notes due 2024 will fully convert those holdings into substantially all of the common equity securities of the company, and the company’s convertible preferred equity will also be cancelled in exchange for a portion of the new common equity of the company. The company will also issue $250.0 million of new debt, the proceeds of which primarily will be used to provide liquidity on its balance sheet,” a press release form Associated Materials announced.
The transactions are expected to substantially reduce Associated Materials‘s net leverage to 2.1 times its Adjusted EBITDA (as calculated in accordance with its credit agreement) for the twelve months ended fiscal June 2020 and expand the company’s total liquidity in excess of $200 million, the company said.
The recapitalization agreement and related transactions, which are subject to customary closing conditions, are expected to close before the end of August 2020.
Associated Materials President & CEO, Brian C. Strauss, will continue to lead the company and serve on its new Board, and the current management team will continue in their respective roles following the closing of the recapitalization.
“From the outset of the COVID-19 pandemic, we have aggressively managed and assessed our operations, capital structure, net debt, and liquidity position with an eye toward strengthening the financial foundation of our company to address unprecedented economic challenges while continuing to serve our customers, support our employees, and partner with our suppliers,” Strauss said. “We believe the productive negotiations with our investors will give AMI a capital structure that will support our strong operating business and set the company up for long-term success. We look forward to working with our new equity holders, and, once our new capital structure is in place, we will remain focused on serving our customers while adding to our legacy of providing the building materials industry with market-leading innovation, products, and services.”