| Item 1.01. |
Entry into a Material Definitive Agreement |
6.375% Senior Notes due 2032
On June 15, 2022 (the “Closing Date”), Builders FirstSource, Inc., a Delaware corporation (the “Company”), completed the previously announced sale of $700 million aggregate principal amount of its 6.375% senior notes due 2032 (the “Notes”) at an issue price of 100.0% (the “Notes Offering”).
The Company used the net proceeds from the Notes Offering to redeem all of the Company’s outstanding 6.750% Senior Secured Notes due 2027 (the “2027 Notes”), including to pay any accrued and unpaid interest thereon, as well as related premiums, fees and expenses, with any remaining net proceeds to be used for general corporate purposes.
The Notes were issued and sold in a private transaction exempt from the registration requirements of the Securities Act of 1933, as amended (the “Securities Act”), to persons reasonably believed to be “qualified institutional buyers,” as defined in and in accordance with Rule 144A under the Securities Act, and to non-U.S. persons outside of the United States pursuant to Regulation S under the Securities Act. Accordingly, the Notes and the related guarantees have not been and will not be registered under the Securities Act and the Notes and the 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. This Current Report on Form 8-K is neither an offer to sell nor a solicitation of an offer to buy the Notes or any other securities and shall not constitute an offer, solicitation or sale in any jurisdiction in which such offer, solicitation or sale would be unlawful.
Indenture
The terms of the Notes are governed by the indenture, dated as of the Closing Date (the “Indenture”), among the Company, the guarantors named therein (the “Guarantors”) and Wilmington Trust, National Association, as trustee (the “Trustee”).
Interest and Maturity
The Notes bear interest at a rate of 6.375% and mature on June 15, 2032. Interest is payable on the Notes on June 15 and December 15 of each year, commencing on December 15, 2022.
Guarantees
The Notes, subject to certain exceptions, are guaranteed, jointly and severally, on a senior unsecured basis, by each of the Company’s direct and indirect wholly owned subsidiaries (the “Guarantors”) that guarantee its obligations under the Company’s senior secured ABL facility (the “ABL Facility”), the Company’s 5.000% senior notes due 2030 (the “2030 Notes”) and the Company’s 4.250% senior notes due 2032 (the “2032 Notes”). Subject to certain exceptions, future subsidiaries that guarantee the ABL Facility, the 2030 Notes, the 2032 Notes or certain other indebtedness will also guarantee the Notes.
Ranking
The Notes constitute senior unsecured obligations of the Company and the Guarantors and rank pari passu in right of payment with all of the existing and future senior indebtedness of the Company, including indebtedness under the ABL Facility, the 2030 Notes and the 2032 Notes, effectively subordinated to all existing and future secured indebtedness of the Company and the Guarantors (including indebtedness under the ABL Facility) to the extent of the value of the assets securing such indebtedness, senior to all of the future subordinated indebtedness of the Company and the Guarantors and structurally subordinated to any existing and future indebtedness and other liabilities, including preferred stock, of the Company’s subsidiaries that do not guarantee the Notes.
Covenants
The Indenture contains restrictive covenants that limit the ability of the Company and its restricted subsidiaries to, among other things, incur additional debt or issue preferred stock, create liens, create restrictions on the Company’s subsidiaries’ ability to make payments to the Company, pay dividends and make other distributions in respect of the Company’s and its subsidiaries’ capital stock, make certain investments or certain other restricted payments, guarantee indebtedness, designate unrestricted subsidiaries, sell certain kinds of assets, enter into certain types of transactions with affiliates, and effect mergers and consolidations.
Certain of these covenants will be suspended if the Notes are assigned an investment grade rating by any two of Standard & Poor’s Investors Ratings Services, Moody’s Investors Service, Inc. or Fitch, Inc. and no default or event of default has occurred and is continuing.