| Item 1.01. | Entry into a Material Definitive Agreement |
6.750% Senior Secured Notes due 2027
On July 25, 2019, Builders FirstSource, Inc., a Delaware corporation, (the “Company”), completed the previously announced sale of $75.0 million aggregate principal amount of its 6.750% senior secured notes due 2027 (the “Additional Notes”) at an issue price of 104.5% (the “Notes Offering”). The Additional Notes form part of the same series as the $400.0 million aggregate principal amount of the Company’s 6.750% senior secured notes due 2027 issued on May 30, 2019 (the “Initial Notes” and, together with the Additional Notes, the “Notes”).
Net proceeds from the Notes Offering were used to redeem $75.0 million aggregate principal amount of the Company’s outstanding 5.625% senior secured notes due 2024 (the “2024 Notes”) and pay related transaction fees and expenses.
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 tonon-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 Form8-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 Additional Notes were issued as additional notes under the indenture, dated as of May 30, 2019 (the “Base Indenture”), by and among the Company, the guarantors named therein and Wilmington Trust, National Association, as trustee (the “Trustee”) and as notes collateral agent (the “Notes Collateral Agent”), as supplemented by the first supplemental indenture, dated as of July 25, 2019 (the “First Supplemental Indenture” and, together with the Base Indenture, the “Indenture”), by and among the Company, the guarantors named therein, the Trustee and the Notes Collateral Agent.
Interest and Maturity
The Notes bear interest at a rate of 6.750% and mature on June 1, 2027. Interest is payable on the Notes on June 1 and December 1 of each year, commencing on December 1, 2019.
Guarantees and Security
The Notes, subject to certain exceptions, are guaranteed, jointly and severally, on a senior secured basis, by certain of the Company’s direct and indirect wholly owned subsidiaries (the “Guarantors”). All obligations under the Notes, and the guarantees of those obligations, are secured by substantially all of the assets of the Company and the Guarantors subject to certain exceptions and permitted liens, including a first-priority security interest in such assets that constitute Notes Collateral (as defined below) and a second-priority security interest in such assets that constitute ABL Collateral (as defined below).
“ABL Collateral” includes substantially all presently owned and after-acquired accounts, inventory, rights of an unpaid vendor with respect to inventory, deposit accounts, investment property, cash and cash equivalents, and instruments and chattel paper and general intangibles, books and records and documents related to and proceeds of each of the foregoing.
“Notes Collateral” includes all collateral which is not ABL Collateral.
On May 30, 2019, the Company, the Guarantors and the Notes Collateral Agent entered into a notes collateral agreement (the “Notes Collateral Agreement”), which created and established the terms of the security interests that secure the Notes and the guarantees.
The ABL/Bond Intercreditor Agreement, dated as of May 29, 2013, among SunTrust Bank, as agent under the Company’s existing ABL facility (the “ABL Facility”), Wilmington Trust, National Association, the Company, the Guarantors and the other parties thereto (as amended by that certain Lien Sharing and Priority Confirmation Joinder, dated as of July 1, 2015, that certain Lien Sharing and Priority Confirmation Joinder, dated as of August 22, 2016, and that certain Lien Sharing and Priority Confirmation Joinder, dated as of May 30, 2019), and the Pari Passu Intercreditor Agreement, dated as of July 31, 2015, among Deutsche Bank AG New York Branch, as term collateral agent under the Company’s existing term loan facility (the “First-Lien Facility”), Wilmington Trust, National Association, the Company, the Guarantors and the other parties from time to time party thereto (as amended by that certain Additional Authorized Representative Agent Joinder, dated as of August 18, 2016, and that certain Additional Authorized Representative Agent Joinder, dated as of May 30, 2019), in each case will be joined by the Notes Collateral Agent and together will govern all arrangements in respect of the priority of the security interests in the ABL Collateral and the Notes Collateral among the parties to the Indenture, the indenture governing the 2024 Notes, the ABL Facility and the First-Lien Facility.
Ranking
The Notes constitute senior secured obligations of the Company and Guarantors, rank senior in right of payment to all future debt of the Company and Guarantors that is expressly subordinated in right of payment to the Notes, and rank equally in right of payment with all existing and future liabilities of the Company and Guarantors that are not so subordinated, including the ABL Facility.
