Beacon Roofing $1.15 billion facility expected September business

By Sara Rosenberg

New York, Aug. 28 – Beacon Roofing Supply Inc. is anticipated to launch its proposed $1.15 billion credit facility sometime in September, according to a market source.

Based on filings with the Securities and Exchange Commission, the facility is expected to consist of a $700 million five-year ABL revolver, of which $350 million will be drawn at close for transaction financing purposes, and a $450 million seven-year covenant-light term loan B.

Pricing on the term loan is expected at Libor plus 300 basis points with a 1% Libor floor and an original issue discount of 99.5, and the debt is anticipated to have 101 soft call protection for six months, filings said.

Revolver pricing is expected to range from Libor plus 125 bps to 175 bps based on quarterly average excess availability.

Proceeds will be used with $300 million of eight-year senior unsecured notes and $291 million in new stock and options to fund the acquisition of Roofing Supply Group.

Backing the bonds is a commitment for a $300 million senior unsecured bridge loan priced at Libor plus 525 bps with a 1% Libor floor. The spread will increase by 50 bps every three months until it hits a cap.

Citigroup Global Markets Inc. and Wells Fargo Securities LLC are the joint lead arrangers on the debt, with Citi listed left on the term loan and Wells Fargo listed left on the revolver and bridge loan.

Under the agreement, Roofing Supply Group is being bought from Clayton, Dubilier & Rice in a cash and stock transaction valued at around $1.1 billion.

Specifically, Roofing Supply Group shareholders will receive about $286 million in cash and $291 million of Beacon common stock, and Beacon will refinance around $565 million of Roofing Supply Group’s net debt.

Closing is expected on Oct. 1, subject to the expiration or termination of the applicable waiting periods under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 and other customary conditions.

Beacon Roofing Supply is a Herndon, Va.-based distributor of residential and commercial roofing materials and complementary building products. Roofing Supply Group is a Dallas-based wholesale distributor of roofing supplies and related materials.

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