Builders FirstSource Gets Court Approval for Settlement of Stockholder Litigation

December 29th, 2009 by Editor

Builders FirstSource Inc. has announced that the Delaware Court of Chancery approved the proposed settlement of the consolidated class and derivative action that was filed in connection with the company’s recapitalization. The court’s approval of the settlement satisfies one of the conditions to the closing of the recapitalization transactions.

The company also announced that approximately 97.7 percent of the holders of the company’s outstanding Second Priority Senior Secured Floating Rate Notes due 2012 have agreed to exchange their 2012 notes in the debt exchange that is part of the recapitalization.

As part of the recapitalization, the company is conducting a rights offering pursuant to which it has distributed, at no charge, to holders of the company’s common stock transferable subscription rights to purchase up to an aggregate of 58,571,428 shares of the common stock at a subscription price of $3.50 per share, or an aggregate of up to approximately $205.0 million in gross proceeds to the company.

In addition, under the terms of the Investment Agreement, dated October 23, 2009, JLL Partners Fund V, L.P. and Warburg Pincus Private Equity IX, L.P. have agreed to purchase from the company, at the rights offering subscription price, unsubscribed shares of the company’s common stock such that gross proceeds of the rights offering will be no less than $75.0 million.

Upon completion of the recapitalization transactions, the company will receive $75.0 million for general corporate purposes and to pay the expenses of the recapitalization transactions, with any remaining proceeds of the rights offering being used to repurchase a portion of the company’s outstanding 2012 notes in the debt exchange.

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