Associated Materials Announces It Has Entered Into Definitiv

|Aug 3|magazine14 min read

CUYAHOGA FALLS, Ohio, Aug. 3, 2020 /PRNewswire/ -- Associated Materials (the "Company" or "AMI"), a North American manufacturer and distributor of exterior building products with over $1.3 billion in annual sales, today announced it has entered into definitive agreements for a series of recapitalization transactions that will significantly de-lever its balance sheet and enhance its liquidity position.

Under the transactions, holders of over 99% of the Company's $675.0 million 9.00% senior secured notes due 2024 (the "Notes," and such holders, the "Noteholders") will fully convert those holdings into substantially all of the common equity securities of the Company, and the Company's convertible preferred equity will also be cancelled in exchange for a portion of the new common equity of the Company.  The Company will also issue $250.0 million of new debt, the proceeds of which primarily will be used to provide liquidity on its balance sheet.

The transactions are expected to substantially reduce AMI's net leverage to 2.1 times its Adjusted EBITDA (as calculated in accordance with its credit agreement) for the twelve months ended fiscal June 2020 and expand the Company's total liquidity in excess of $200 million.

The recapitalization agreement and related transactions, which are subject to customary closing conditions, are expected to close before the end of August 2020 and the Company has ample liquidity on its balance sheet through the expected closing of the transactions.

Associated Materials President & CEO, Brian C. Strauss, will continue to lead the Company and serve on its new Board, and the current management team will continue in their respective roles following the closing of the recapitalization.  "From the outset of the COVID-19 pandemic, we have aggressively managed and assessed our operations, capital structure, net debt, and liquidity position with an eye toward strengthening the financial foundation of our Company to address unprecedented economic challenges while continuing to serve our customers, support our employees, and partner with our suppliers," said Brian C. Strauss.  "We believe the productive negotiations with our investors will give AMI a capital structure that will support our strong operating business and set the Company up for long-term success.  We look forward to working with our new equity holders, and, once our new capital structure is in place, we will remain focused on serving our customers while adding to our legacy of providing the building materials industry with market-leading innovation, products, and services."

Justin Tasso, a Portfolio Manager & Partner with Oak Hill Advisors, is expected to serve as lead director of the new Board.  Mr. Tasso commented that "As the close of the recapitalization approaches, Oak Hill Advisors and the other Noteholders are enthused by AMI's enhanced balance sheet and are excited to participate in AMI's promising future alongside customers, employees, and other stakeholders.  AMI is a resilient business that has performed impressively during the COVID-19 pandemic and has many avenues towards further growth and value creation."

Rothschild & Co is acting as investment banker to the Company, Kirkland & Ellis LLP is serving as the Company's legal counsel, and Alvarez & Marsal North America LLC is acting as the Company's financial advisor.  Ankura Consulting Group, LLC is acting as financial advisor and Schulte Roth & Zabel LLP, Paul, Weiss, Rifkind, Wharton & Garrison LLP, and Morrison & Foerster LLP are providing legal counsel to the Noteholders.

About Associated Materials
Associated Materials' mission is to create successful partnerships with contractors, builders, distributors, and dealers by providing, installing, and servicing industry leading exterior building products and solutions.  The Company helps partners create or restore exceptional residential, multi-family, and light commercial structures that are energy-efficient, comfortable, long-lasting, and beautiful for the home or building owner.  The Company operates 11 manufacturing facilities in the United States and Canada which produce vinyl windows, vinyl siding and accessories, and metal building products.  The Company also operates 122 supply centers across the United States and Canada under the Alside® and Gentek® brands, respectively.  For more information, visit associatedmaterials.com.

Forward-Looking Statements
Statements in this press release regarding our recapitalization, the related transactions and our future results of operations, financial performance, liquidity and prospects include "forward-looking statements."  Forward-looking statements are subject to known and unknown risks and uncertainties that may cause actual results to differ materially from those expressed or implied in such forward-looking statements.  These risks and uncertainties include, but are not limited to, our ability to close the recapitalization transactions and improve our liquidity and long-term capital structure through the recapitalization; our ability to retain key personnel and maintain relationships with suppliers, customers, employees and other third parties following the recapitalization; declines in remodeling and home building industries; and the impact of COVID-19 on the Company's business, industry and the economy generally.  Additional information concerning these and other important risks and uncertainties can be found in the Company's annual and quarterly reports made available to its lenders and noteholders.  While the Company believes that its assumptions are reasonable, it is very difficult to predict the impact of known factors, and, of course, it is impossible to anticipate all factors that could affect actual results.  The Company undertakes no obligation to update any forward-looking statements to reflect subsequent events or circumstances, and you are cautioned not to unduly rely on such forward-looking statements.

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SOURCE Associated Materials