Foundation Building Materials to Sell Mechanical Insulation Bus. to Dunes Point Capital for $122.5 Million; Continued Debt Re...
September 27 2018 - 6:12AM
Business Wire
Transaction Highlights
- Net proceeds of approximately $116.0
million will be used to pay down debt
- Enhances long-term
profitability
- Divestment of non-core
asset
Foundation Building Materials, Inc. (“FBM” or the “Company”)
(NYSE:FBM), today announced that it has entered into a definitive
agreement to sell its Mechanical Insulation segment to an affiliate
of Dunes Point Capital, LP, for $122.5 million, subject to
customary closing conditions and is expected to close during the
fourth quarter of 2018.
The Mechanical Insulation (“MI”) segment distributes and
fabricates commercial and industrial insulation products through 67
branch and fabrication locations in the United States and Canada
that provide solutions for pipes and mechanical systems to
insulation contractors, HVAC contractors, and general contractors
and operators of large industrial facilities. In addition, the MI
segment provides insulation fabrication services that customize
products to fit specific systems for commercial and industrial
customers.
“The divestiture of the Mechanical Insulation segment will
sharpen FBM’s focus on growing our more profitable businesses while
driving superior service and productivity for our customers,” said
Ruben Mendoza, President, and Chief Executive Officer. “Today’s
announcement advances our strategy of reducing debt, improving
profitability, and optimizing FBM’s portfolio and positions FBM to
enhance shareholder value.”
Use of Proceeds
Net proceeds of approximately $116.0 million from the
transaction will be used to pay down the Company's ABL credit
facility. In addition to the anticipated reduction of the ABL
credit facility, FBM recently completed the refinancing of its
long-term debt and expects $12 million to $15 million of annual
cash interest expense savings beginning in the fourth quarter of
2018. With the completion of these two transactions, the Company
believes it will have ample liquidity to pursue its growth
initiatives while continuing its focus of reducing debt.
2018 Outlook
Upon closing of the transaction, the Company will operate under
one segment, Specialty Building Products. For 2018, the Company
expects full year 2018 Specialty Building Product segment net sales
to be in the range of $1.98 billion to $2.06 billion, which
includes net sales contributions from acquisitions to date.
Conference Call
The Company will host a conference call with investors to
discuss today’s announcement at 8:30 AM Eastern Time.
The call can be accessed in three ways:
- At the investors section of the FBM
website: investors.fbmsales.com;
- By Telephone: For both listen-only
participants and those who wish to take part in the question and
answer portion of the call, the telephone dial-in number in the
U.S. is (877) 407-9039. For participation outside the U.S., the
dial-in number (201) 689-8470; or
- By audio replay: A replay of the call
will be available beginning at 12:00 PM Eastern Time on Thursday,
September 27, 2018, and ending 11:59 PM Eastern Time on Thursday,
October 4, 2018. Dial-in numbers for U.S. participants are (844)
512-2921. Participants outside the U.S. should use the replay
dial-in number (412) 317-6671. All callers will be required to
provide the Conference ID of 13683610.
About Foundation Building
Materials
Foundation Building Materials is a specialty distributor of
wallboard, suspended ceiling systems and mechanical insulation
throughout North America. Based in Tustin, California, the Company
employs more than 3,700 employees and operates more than 220
branches across the U.S. and Canada.
Forward-Looking
Statements
This press release contains forward-looking statements, which
are subject to the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995. Forward-looking statements include,
without limitation, any statements regarding the expected benefits
to FBM and its shareholders from completing the divestiture,
ability of the parties to complete the proposed transaction
considering the various closing conditions, the expected benefits
of the proposed transaction and the debt reduction strategy,
expected timing and structure of the proposed transaction and may
contain words such as "believe," "anticipate," "expect,"
"estimate," "intend," "project," "plan," or words or phrases with
similar meaning. Forward-looking statements should not be read as a
guarantee of future performance or results and will not necessarily
be accurate indications of the times at, or by, which such
performance or results will be achieved. Forward-looking statements
are based on current expectations, forecasts and assumptions that
involve risks and uncertainties, including, without limitation,
economic, competitive, governmental and technological factors
outside of FBM's control, that may cause the business, strategy or
actual results to differ materially from the forward-looking
statements. We do not intend, and undertake no obligation, to
update any forward-looking statements, whether as a result of new
information, future events or otherwise, except as may be required
by applicable law. Investors are referred to our filings with the
Securities and Exchange Commission, including our Annual Report on
Form 10-K and our Quarterly Reports on Form 10-Q for additional
information regarding the risks and uncertainties that may cause
actual results to differ materially from those expressed in any
forward-looking statement.
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version on businesswire.com: https://www.businesswire.com/news/home/20180927005374/en/
Investor RelationsFoundation
Building MaterialsJohn Moten, 657-900-3213VP Investor
RelationsJohn.moten@fbmsales.comOrMedia RelationsJoele Frank,
Wilkinson Brimmer KatcherJed Repko or Ed Trissel, 212 355-4449
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