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BofA Provides $600MM Credit Facility to Support HDI Distribution Acquisition of Novo Building Products

August 03, 2021, 07:06 AM
Filed Under: Building Supplies
Related: Bank of America

Hardwoods Distribution Inc. completed its previously announced acquisition of the equity interests in Novo Building Products Holdings, LLC ("Novo"). The Acquisition was completed for a purchase price of U.S.$302 million and had an effective closing date of July 30, 2021.

In connection with the closing of the Acquisition, HDI closed on a new credit facility with its existing lender Bank of America, N.A. (the "Lender"). This senior secured facility was increased to U.S.$600 million (the "New Credit Facility") from the previously announced U.S.$525 million given strong demand from the syndicate of underwriters. The New Credit Facility was used to refinance the outstanding debt of certain of the Company's subsidiaries and fund the purchase price for Novo. The New Credit Facility consists of (i) a revolving credit facility of US$225 million which can be drawn upon in U.S. dollars and Canadian dollars, and (ii) a term loan of US$375 million. The New Credit Facility bears interest at a rate equal to LIBOR plus up to 2.25% or the base rate of interest charged by the Lender from time to time plus 1.0%. The LIBOR and Base Rate margins for the New Credit Facility are subject to performance pricing adjustments, from time to time, based on the Company's then applicable leverage ratio.

"This is a transformative acquisition for the Company," said Rob Brown, President and Chief Executive Officer of HDI. "Novo significantly broadens our addressable market, providing turnkey access into the home center and home builder distribution customer segments. We believe the combined scale and sophistication of HDI and Novo creates a national platform to provide additional solutions to our customers, and allows us to capitalize on the market share opportunity available. The multi-year outlook for our products and the end markets we participate in is very attractive, with strong demand driving new residential, repair and remodel and commercial building expenditures. Millennials represent the largest demographic segment of the population and are now entering peak home buying years, complemented by historically low interest rates and rising home equity levels that support spending. We see significant growth opportunities ahead as we continue to build HDI as a world class distributor of architectural building products for the benefit of our customers, vendor partners, employees and shareholders."

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