Item 1.01. Entry into a Material Definitive Agreement.
On October 11, 2017, Beacon Roofing Supply, Inc. (the Company) and Beacon Escrow Corporation, a Delaware corporation and a
wholly-owned subsidiary of the Company (the Issuer), entered into a purchase agreement (the Purchase Agreement) with Wells Fargo Securities, LLC and Citigroup Global Markets Inc., as representatives (the
Representatives) of the several initial purchasers named therein (the Initial Purchasers), pursuant to which the Issuer has agreed to sell $1.3 billion aggregate principal amount of its 4.875% Senior Notes due 2025 (the
Notes) in a private offering. The offering of the Notes is expected to close on October 25, 2017 (the Closing Date), subject to customary closing conditions.
The Notes will be issued pursuant to an indenture (the Indenture) between the Issuer and U.S. Bank National Association, as
trustee (the Trustee), to be dated as of the Closing Date.
Concurrently with the closing of the offering, the Issuer will
deposit the net proceeds from the offering, along with certain additional funds, in a segregated escrow account. Following the release of proceeds from escrow upon satisfaction of the escrow conditions, the Company expects to use the net proceeds
from the Notes offering, together with the net proceeds from its recently completed underwritten public common stock offering, the previously announced committed convertible preferred equity financing from an entity affiliated with the investment
firm Clayton, Dubilier & Rice LLC, and borrowings under the Companys anticipated new senior secured credit facilities, to finance the previously announced acquisition (the Allied Acquisition) of Allied Building Products
Corp. (Allied), refinance certain of the Companys existing indebtedness and pay related fees and expenses. The Allied Acquisition is expected to close on January 2, 2018, subject to the satisfaction of customary closing
conditions, and the Company cannot guarantee that the Allied Acquisition will be completed on or about such date, or at all.
Following
the consummation of the Allied Acquisition, (i) the Issuer will merge with and into the Company, with the Company continuing as the surviving corporation (the Escrow Merger), and the Company is to assume the obligations of the
Issuer under the Notes and the Indenture (the Assumption) by executing a supplemental indenture (the Supplemental Indenture); (ii) the Company, certain of its direct and indirect subsidiaries (the Guarantors)
and the Trustee will execute and deliver the Supplemental Indenture, pursuant to which each Guarantor will become a guarantor with respect to the Notes; and (iii) each of the Guarantors will execute and deliver a joinder agreement to the
Purchase Agreement, whereby they will agree to be bound by the terms of the Purchase Agreement applicable to Guarantors as if they were each an original signatory thereto.
The Purchase Agreement contains customary representations, warranties and agreements by the Company, the Issuer and the Guarantors. In
addition, the Company, the Issuer and the Guarantors have agreed to indemnify the Initial Purchasers against certain liabilities, including liabilities under the Securities Act of 1933, as amended (the Securities Act), or to contribute
to payments the Initial Purchasers may be required to make in respect of those liabilities. Furthermore, the Company and the Issuer have agreed with the Initial Purchasers not to offer or sell any debt securities issued or guaranteed by the Company
or the Issuer for a period of 90 days after the date of the Purchase Agreement without the prior written consent of the Representatives.
The Notes will be offered only to qualified institutional buyers under Rule 144A of the Securities Act of 1933, as amended (the
Securities Act), and to certain non-U.S. persons in transactions outside the United States under Regulation S under the Securities Act. The issuance and sale of the Notes and, from and after the Assumption, the related guarantees have
not been and will not be registered under the Securities Act or the securities laws of any state or other jurisdiction, and the Notes and related guarantees may not be offered or sold in the United States absent registration or an applicable
exemption from the registration requirements of the Securities Act and other applicable securities laws.
The foregoing description of the
Purchase Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of the Purchase Agreement, a copy of which is filed as Exhibit 10.1 hereto, and which is incorporated herein by reference.
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The Initial Purchasers and their respective affiliates perform various financial advisory,
investment banking and commercial banking services from time to time for the Company and its affiliates for which the Company and its affiliates pay customary compensation. Certain of the Initial Purchasers and/or their affiliates are lenders
and/or agents under certain of the Companys debt facilities, including the Companys existing senior secured asset-based revolving credit facility and senior secured term loan B facility (collectively, the Existing
Senior Secured Credit Facilities), and certain of those Initial Purchasers or their respective affiliates routinely hedge, and certain other of those Initial Purchasers or their respective affiliates may hedge, their credit exposure to the
Company consistent with their customary risk management policies. An affiliate of Citigroup Global Markets Inc. is providing financial advisory services to the Company in connection with the Allied Acquisition, for which they are receiving customary
fees and expenses. J.P. Morgan Securities LLC is providing financial advisory services to Allied and its affiliates in connection with the Allied Acquisition, for which they are receiving customary fees and expenses. In addition, certain of the
Initial Purchasers and/or their affiliates acted as underwriters for the Companys offering of 7,273,750 shares of its common stock completed on September 25, 2017 (the Common Stock Offering). In connection with the financing
of the Allied Acquisition, the Company entered into a commitment letter with each of the Initial Purchasers and/or certain of their respective affiliates providing, in part, for a senior unsecured bridge facility in an aggregate principal amount of
up to $1.3 billion (the Bridge Facility). Following the completion of the Common Stock Offering, the commitments under the Bridge Facility were automatically reduced to approximately $1.05 billion. The Initial Purchasers
commitments under the Bridge Facility will be reduced dollar-for-dollar, down to $0, by the gross proceeds of the Notes offering, and the related commitment will be terminated. In addition, Wells Fargo Securities, LLC, Citigroup Global Markets Inc.,
J.P. Morgan Securities LLC, Merrill Lynch, Pierce, Fenner & Smith Incorporated and SunTrust Robinson Humphrey, Inc. and/or certain of their respective affiliates have held commitments as lenders under the Existing Senior Secured Credit
Facilities, and will receive their proportionate share of any amount of the Existing Senior Secured Credit Facilities that is repaid with the proceeds from the Notes offering.