CD&R Takes Stake In NCI
The PE firm will invest $250 million in the Houston-based coil manufacturer, and will own a 72% stake in the company.
August 17, 2009
Troubled metal coil manufacturer NCI Building Systems will sell a 72% stake to New York- and London-based private equity firm Clayton, Dubilier & Rice (CD&R) as the company attempts to bolster its balance sheet.
The $250 million transaction has been approved by the Houston-based coil manufacturer’s board of directors, and is expected to close by the end of the fourth quarter. The private equity firm will invest in the coil maker with capital from its eighth fund, Clayton, Dubilier & Rice Fund VIII L.P., which closed in October 2007.
The June, NCI saw $120.2 million in losses, compared to a profit of $14.09 million in the prior quarter. At the time, the company’s chief executive and chairman, Norman Chambers, discussed an imminent deal with an private equity firm on a shareholders earning call. Chambers did not mention CD&R by name during the call.
NCI is attempting to reduce its debt by $323 million. Chambers discussed the company’s efforts to address the company’s convertible notes and revolver in term B during the June earnings call. The manufacturer said it was renegotiating terms with its lenders, Greenhill & Co. and Wachovia.
Earlier this month, Great Atlantic & Pacific Tea Co., the parent company of the A&P supermarket chain, made a similar move to refurbish its balance sheets, recieving a cash infusion from Ron Burkle’s The Yucapia Cos.
NCI management will remain intact following the transaction, though the board will be expanded to include two additional independent directors. James G. Berges will be named chairman of NCI’s executive committee.
Greenhill & Co. served as NCI’s financial advisor on the deal, and Wachtell, Lipton, Rosen & Katz served as the company’s legal advisor. Sagent Advisors acted as financial advisor to CD&R, and Debevoise & Plimpton acted as legal advisor to the PE firm. Calls placed to NCI and CD&R were not returned by press time.
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