ATLANTA, Jan. 10, 2013 (GLOBE NEWSWIRE) -- BlueLinx Holdings Inc. (NYSE:BXC), a leading distributor of building products in North America, today announced that it plans to commence a rights offering of common stock to its stockholders which, if fully subscribed, will produce gross proceeds to the Company of approximately $40 million. The Company expects to utilize the estimated net proceeds of the rights offering of approximately $38.8 million to repay indebtedness under its U.S. revolving credit facility.
As of December 29, 2012, debt outstanding under the Company's revolving credit facilities was approximately $171.4 million and excess availability under these facilities was approximately $86.6 million. After giving effect to the rights offering and the application of the estimated net proceeds therefrom, debt outstanding under the Company's revolving credit facilities as of December 29, 2012 would have been $132.6 million and excess availability would have been approximately $125.4 million. Substantially all of the Company's remaining indebtedness of $209.6 million as of December 29, 2012 consists of mortgage indebtedness which is an obligation of the Company, but not an obligation of its operating subsidiary; the operating subsidiary is the counterparty to substantially all of the Company's trade payables and other ordinary course liabilities. In addition, such mortgage indebtedness is secured by real property owned by the Company which the Company believes has a current fair market value in excess of the related mortgage debt.
Cerberus ABP Investor LLC ("Cerberus"), the Company's majority shareholder, has indicated that it intends, subject to the exercise price of the rights being set at an acceptable amount, to exercise all of the rights issued to it and to subscribe for the maximum additional shares pursuant to the over-subscription privilege that it would be entitled to purchase. However, such indication is not binding, and Cerberus is not legally obligated to do so.The Company is conducting the rights offering because, as the housing market and general economic conditions continue to improve, the additional capital raised in the rights offering would allow the Company to participate more fully in these improving conditions. The Company's sales depend heavily on the strength of national and local new residential construction and home improvement and remodeling markets, which are showing signs of significant improvement. Moreover, the government's legislative and administrative measures aimed at restoring liquidity to the credit markets and providing relief to homeowners facing foreclosure are beginning to show positive results. The overall housing market and economy are also improving, which is expected to lead to a considerable increase in residential construction and, to a lesser extent, in home improvement activity. If the Company and its industry continue to recover from the historic housing market downturn, the Company expects its sales to improve and therefore its need for inventory and its accounts receivable to increase. This increase in working capital is expected to use some of the Company's current excess availability under its revolving credit facilities. While the Company believes that the amounts currently available from its revolving credit facilities and other sources will be sufficient to fund its routine operations and capital requirements for at least the next 12 months, it is conducting the rights offering to provide it with a stronger liquidity position and allow it to more fully participate in the improving housing market. The Company believes that this stronger liquidity position will also give the Company an advantage over many competitors that have less liquidity and less or no access to additional capital, and therefore may not be able to fully participate in the opportunities that arise in a growing market.
Select the service that is right for you!COMPARE ALL SERVICES
Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.
- Real Money + Doug Kass + 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV