BMHC, one of the LBM industry’s largest players, has defaulted on one of its loans and is now seeking a temporary waiver to help preserve its liquidity. Based on preliminary financial information for its second quarter, the San Francisco-based company was out of compliance with its covenants relating to minimum net worth and minimum earnings before interest, tax, depreciation and amortization.
As a result, the lenders under the credit facility can cease further borrowings and require BMHC to repay borrowed amounts immediately.
As of July 28, 2008, the company had $29 million outstanding on a revolving loan and $340 million on a term loan.
In a prepared statement, BMHC said it has been discussing a temporary waiver of the covenants with its lenders to retain access to liquidity, as well as an amendment that would better reflect market conditions.
Ranked fifth on the Pro Dealer Top 350 for 2007, BMHC’s sales dropped 28.7 percent last year, from $3.20 billion to $2.28 billion.