NCI extends exchange offer for 2.125% convertibles, gets lender consents to refinance facility

By Angela McDaniels

Tacoma, Wash., Oct. 8 - NCI Building Systems, Inc. extended the exchange offer for its 2.125% convertible senior subordinated notes due 2024 to 11:59 p.m. ET on Oct. 19 from Oct. 7, according to a company news release.

As of 10 p.m. ET on Oct. 7, holders had tendered about $179.8 million, or 99.9%, of the convertibles.

The company also announced that it has received consents from lenders holding more than two-thirds of its senior secured debt for the refinancing of its existing credit facility.

The exchange offer and refinancing are part of NCI's plan to address its significant near-term debt repayment obligations - a plan that might include a bankruptcy filing.

In the exchange offer, noteholders will receive $500 in cash and 390 shares of common stock for each $1,000 principal amount of notes tendered.

The credit facility refinancing calls for the repayment of about $143 million and a modification of the terms and maturity of the remaining $150 million of debt.

In connection with obtaining lock-up agreements with some of the company's term loan lenders, NCI said it will modify the proposed terms of the term loan refinancing to include an increase of 1% in the amended interest rate, payment of the 2% consent fee on the full outstanding balance of the term loan, rather than only on the remaining portion, to lenders that execute the restated credit agreement prior to the voting deadline and some additional provisions for principal amortization in 2010.

These modified terms are subject to the receipt of approval from two-thirds of the noteholders that entered into a lock-up and voting agreement with the company. NCI previously said that holders of more than 79% of the notes were party to this agreement.

The voting deadline for the solicitation of acceptances of the prepackaged plan will expire at 11:59 p.m. ET on Oct. 19.

The company has proposed a financial restructuring and is offering two options.

The first option is an out-of-court recapitalization plan that includes the exchange offer for the convertibles, a $250 million equity investment in the company by Clayton, Dubilier & Rice Fund VIII, LP through a private placement of preferred stock, a refinancing of the company's credit agreement and entry into a new $125 million asset-based loan facility.

If the conditions to this recapitalization plan are not met, the company will instead pursue a prepackaged plan of reorganization. Under this plan, treatment of creditors would include:

• Holders of administrative claims, priority tax claims, secured tax claims, general unsecured claims and priority non-tax claims would be paid in full in cash;

• Holders of senior secured term loan claims would receive a share of cash equal to the difference between the outstanding credit agreement principal amount and $150 million, and the credit agreement would be amended;

• Other secured claims would be reinstated;

• Holders of convertible notes claims would receive $500 and 390 shares of stock for each $1,000 of convertible notes;

• Intercompany claims would be reinstated or otherwise discharged, at the reorganized company's option;

• Intercompany interests would be reinstated; and

• Holders of equity interests and 510(b) claims would receive no distribution.

Greenhill & Co., LLC (888 504-7336) is the dealer manager for the exchange offer, which began on Sept. 10.

NCI is a Houston-based integrated manufacturer of metal products for the nonresidential building industry.

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