Associated Materials, a North American manufacturer and distributor of exterior building products with over $1.3 billion in annual sales, has entered into definitive agreements for a series of recapitalization transactions to de-lever its balance sheet and enhance its liquidity position. Under the transactions, holders of over 99% of the company’s $675.0 million 9.0% senior secured notes due 2024 will fully convert those holdings into substantially all of the common equities securities of Associated Materials. Associated Materials’ convertible equity will also be canceled in exchange for a portion of the new common equity of the company.
Additionally, Associated Materials will also issue $250.0 million of new debt and will use the proceeds to provide liquidity on its balance sheet. The company anticipates the transactions will substantially reduce its net leverage to 2.1 times its adjusted EBITDA for the twelve months ended fiscal June 2020 and expand its total liquidity in excess of $200 million.
“From the outset of the COVID-19 pandemic, we have aggressively managed and assessed our operations, capital structure, net debt, and liquidity position with an eye toward strengthening the financial foundation of our company to address unprecedented economic challenges while continuing to serve our customers, support our employees, and partner with our suppliers,” president and CEO Brian Strauss said in a prepared statement. “We believe the productive negotiations with our investors will give Associated Materials a capital structure that will support our strong operating business and set the company up for long-term success.”
Strauss will continue to lead Associated Materials and serve on its new board, and the current management team will continue in their respective roles following the closing of the recapitalization, according to the company. Justin Tasso, a portfolio manager and partner with Oak Hill Advisors, is expected to serve as lead director of the company’s new board.
Cuyahoga Falls, Ohio-based Associated Materials operates 11 manufacturing facilities in the United States and Canada which produce vinyl windows, vinyl siding and accessories, and metal building products. The company also operates 122 supply centers under the Alside and Gentek brands.
