LUMBERYARDS

Builders FirstSource secures $160 million

BY Ken Clark

Dallas-based Builders FirstSource announced the completion of a $160 million first-lien Term Loan financing agreement with affiliates of Highbridge Principal Strategies.

The company also announced it had entered into a standalone letter of credit facility with SunTrust Bank, which provides for the issuance of up to $20 million of letters of credit.

With the proceeds, the LBM dealer intends to repay the $20 million outstanding under the current revolving credit facility, use $14.2 million to collateralize letters of credit outstanding under the new LC Facility, and pay fees and expenses related to the transaction.

"This financing transaction strengthens our liquidity and positions us to take full advantage of the expected recovery in housing," said Floyd Sherman, Builders FirstSource CEO.

Sherman added that improvement in 2011 financial results allowed the deal to happen — sales in November have exceeded the company’s expectations. 

"Our sales results through November have exceeded our expectations, delaying the anticipated seasonal reduction in working capital typically seen by this point in the year," Sherman said. "Our liquidity has also enabled us to take advantage of opportunistic inventory buys to protect customer pricing as we head into 2012."

Upon receipt of the $119.6 million in net proceeds related to this transaction, Builder FirstSource’s cash balance was about $150 million, and net liquidity was about $115 million after giving effect to a $35 million minimum cash requirement contained in the term loan. 

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Rolling out its ERP system, ProBuild hires Mohawk exec

BY HBSDEALER Staff

Don Riley, the former chief information officer of carpet manufacturer Mohawk, has been selected as the new executive VP supply chain and technology for ProBuild. This surprise appointment, announced Nov. 23, reached outside the LBM industry to fill a role overseeing the largest pro dealer’s supply chain, information technology and manufacturing organizations.

Reporting to Riley will be Paul Dodge, senior VP supply chain; Lonnie Bernardoni, senior VP manufacturing and business process improvement lead; and John Huber, chief information officer.

According to the announcement, Riley’s job will be to integrate the company’s IT, supply chain and manufacturing divisions. “Riley’s duties will also include the planning and implementation of enterprise IT systems in support of business operations in order to improve cost-effectiveness and service quality. Additionally, Riley will direct and manage ProBuild’s technology infrastructure and environment, including the design and development of business-focused application solutions to support ProBuild’s business operations.”

 A tall order, given the scope of the company’s attempt to integrate all its lumberyard acquisitions into one Oracle-based ERP system. An initial rollout of the “ProEdge” platform on the East Coast to former Strober units did not go smoothly, and a series of snags and cost overruns have followed as the company has tried to make it work on both the front and back end at other ProBuild  locations. But ProBuild is determined to move forward with ProEdge and has scheduled more rollouts for next year.  Jennifer Thurman, a spokeswoman for ProBuild, would not disclose the exact number of lumberyards or their locations, but she called the ProEdge rollout “a top priority” for the Denver-based company.

“We have already begun additional deployment efforts [this year],” Thurman said. “In 2012, we will continue to focus on deploying ProEdge and driving new and enhanced capabilities and technology, delivering competitive advantage into the marketplace.”

Leading the charge will be Riley, who has a strong background in both information technology and logistics. As the senior VP and CIO at Mohawk, the 49-year-old executive was responsible for the carpet manufacturer’s global information systems and strategies and its logistic functions in North America. The company operates 50 distribution centers and 250 wholesale outlet stores and operates its own trucking fleet.

Prior to Mohawk, Riley worked for Kellwood Co., a privately held, $2.4 billion women’s apparel firm. During his six years there, Riley implemented a new ERP and warehouse management system as the company’s chief information officer.

Riley also has 13 years of sales experience earlier in his career, when he worked for information technology and services firm EDS.

“Don brings significant experience to ProBuild, having led the successful implementation and extension of enterprise systems in previous roles,” said Fred Marino, president and CEO of ProBuild. “A critical element of our vision is the successful integration of technology into all areas of our business. We believe that technology will transform the home-building industry, and it is our goal to take a significant leadership role in that transformation. We look forward to the expertise and leadership Don brings to help us achieve our vision.”

ProBuild is the nation’s largest LBM chain, with more than 435 locations serving 45 U.S. states.

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NLBMDA applauds restoration of higher FHA loan limits

BY HBSDEALER Staff

The National Lumber and Building Material Dealers Association (NLBMDA) applauded Congress for reinstating the higher conforming loan limits for the Federal Housing Administration (FHA) through 2013, helping reduce uncertainty for an already fragile housing market. 

By increasing the loan limits guaranteed by FHA to $729,750, Congress has taken a step to stabilize home values while enabling creditworthy consumers to get home loans with the best mortgage rates, lowest fees and better down payment requirements, the NLBMDA said.

"We thank the Republican and Democratic leadership in Congress for backing legislation that supports the recovering housing market, creates jobs, and allows access to affordable and reliable financing to responsible home buyers and owners," said Michael O’Brien, NLBMDA president and CEO.

Despite the action by Congress on FHA loans, the lower Fannie Mae and Freddie Mac conforming loan limits of $629,500, which went into effect Oct. 1, remain in place. The NLBMDA said it will continue its efforts in restoring the higher conforming loan limits for Fannie Mae and Freddie Mac.

 

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