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NCI Building delays $250m deal with CD&R

The metal parts manufacturer is negotiating with debt holders over a debt exchange that is integral to the closing of the deal.

NCI Building Systems has delayed the closing of its $250 million deal with Clayton Dubilier & Rice as it negotiates with debt holders over an exchange offer that was set for Friday.

The launch of the debt exchange offer, integral to the closing of the deal, will be extended, but the company did not disclose a new date.

NCI and CD&R announced the deal earlier this month in which the firm would take a 72 percent stake in NCI through the purchase of newly issued convertible participating preferred shares.

The deal is meant to help NCI meet its short-term debt obligations and reduce its total debt load by $323 million.

But completion of the deal hinges on the successful close of various pieces of a debt restructuring. Requirements for closing include an exchange offer to retire the company’s existing convertible notes due 2024, the refinancing of the company’s senior secured credit facility and entry into a $125 million asset-based revolving credit facility. 

The company and CD&R are in negotiations with note holders over terms of the exchange offer, the company said in a statement. The original offer would have given note holders $500 cash plus 125 shares of NCI common stock for each $1,000 note. The new terms under negotiations would give them $500 cash plus 390 shares for every $1,000 principal amount tendered in the offer. This would cut CD&R’s stake to about 68.5 percent.

The investment comes from Clayton Dubilier & Rice Fund VIII, which is targeting between $6 billion and $7 billion and reached $4.3 billion earlier this year.