Headwaters Incorporated Announces The Exchange Of $49.8 Million Of 2014 Convertible Notes For 8.75% Convertible Senior Subordinated Notes Maturing February 2016

HEADWATERS INCORPORATED (NYSE: HW) , a building products company dedicated to improving lives through innovative advancements in construction materials, today announced completion of a privately negotiated exchange of its 2.50% Convertible Senior Subordinated Notes due 2014 with a face value of $49.8 million, for 8.75% Convertible Senior Subordinated Notes due 2016 with a face value of $49.8 million (the “New Notes”). In addition, a premium totaling less than $0.6 million was paid in conjunction with the exchange. In effect, the exchange extends the maturity date of $49.8 million of debt for two years, creating a maturity schedule that corresponds to the generation of free cash flow available for repayments.

The New Notes will accrue interest at a rate of 8.75% per annum, with interest payable in cash semi-annually in arrears on February 1 and August 1 of each year, beginning on August 1, 2012. The maturity date of the New Notes is February 1, 2016.

“We are pleased with the successful effort to exchange nearly $50 million of notes which would otherwise have matured in early calendar 2014, and extend those maturities by two years,” stated Don P. Newman, Headwaters’ Chief Financial Officer. “The maturity extension reduces Headwaters’ refinancing risk and creates a debt maturity profile that better fits the cash generation profile of the business should recovery in end markets be slow to develop.”

As a result of the above exchange and previously announced redemptions and repurchases of its 16% and 14.75% Convertible Senior Subordinated Notes, Headwaters’ debt structure is now as follows:

Issue		Outstanding Par Value ($ millions)		Maturity Date
7 5/8% Senior Secured Notes		$400.0		April 2019
2.5% Convertible Senior Subordinated Notes		$63.6		February 2014
8.75% Convertible Senior Subordinated Notes		$49.8		February 2016
Asset based loan facility ($70 million limit, with a rate of LIBOR plus 2.75% if drawn)		$0.0		October 2014
Total Gross Debt (par value)		$513.4

“Including the recent redemptions and repayments, Headwaters has retired approximately $30 million of subordinated debt during its fiscal 2012, including over $10 million in the third fiscal quarter,” added Mr. Newman. “We believe that we have resolved our capital structure issues, and have a structure well matched to our cash flow.”

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