09-28-2011, 07:02 PM
(This post was last modified: 09-28-2011, 07:05 PM by PonderThis. Edited 2 times in total.)
Things seemingly couldn't be much worse for Klamath Falls Jeld Wen: http://www.oregonlive.com/business/index..._onex.html
Excerpt: "Jeld-Wen Inc., the ailing Oregon window-and-door giant, sold $448 million in junk bonds Tuesday at an eye-popping price — 12 7/8 percent interest — to enable its takeover by a Canadian firm.
The debt issue saddles the Klamath Falls-based company with high borrowing costs as it struggles to survive continued fallout from the housing-market crash. Jeld-Wen, like a homebuyer with maxed-out credit cards applying for a jumbo loan, must pay a steep price.
But the bond sale clears the way for a crucial bailout by Onex Corp., a private-equity firm that will acquire a majority stake in the company long controlled by the family of Dick Wendt, Jeld-Wen’s co-founder.
Managers of Jeld-Wen, Oregon’s largest privately held company, hadn’t intended to hand over the reins. An initial agreement with Onex would have preserved the family’s controlling stake. But Wendt’s son, Rod Wendt, the company’s current chief executive, agreed to give up the presidency to an Onex man and to accept an increased $864 million investment by the Canadians that will give them a 58 percent stake in Jeld-Wen.
Ultimately, Jeld-Wen loaded more equity and bank financing on top of Tuesday’s bond sale, according to Teri Cline, a company spokeswoman. The company originally circulated a proposed $575 million bond issue, but shrank the offering Monday, ending up Tuesday with gross proceeds of $448 million.
It’s unknown whether Onex boosted its investment still further to help make up the difference, and whether Bank of America, which led the consortium on the bond sale, was the bank loaning more money.
"Due to legal constraints," Cline said, “I am unable to discuss anything else pertaining to the bonds right now.” Onex’s spokeswoman has not returned phone calls in weeks.
Market sources who told The Oregonian of Tuesday’s sale said Jeld-Wen discounted the offering with a 97.4 percent issue price, meaning proceeds came in at $448 million instead of the $460 million face value.
A confidential pricing supplement obtained by the newspaper listed a 12 7/8 percent yield to maturity, due in October 2017. As is customary, the circular did not identify the bond buyers.
Jeld-Wen, under pressure from its banks for violating loan terms, scrambled to repackage its debt issue this month after postponing marketing attempts because of a soft bond market and disappointing reaction to a sales trip last month. To make the junk bonds appealing, the company raised the interest rate from the range initially discussed of 9.5 percent to 9.75 percent.
The repackaged offering persuaded Standard & Poor’s to drop a deathly CCC-plus rating assigned to the original offer. Triple C plus indicates substantial risks, whereas S&P’s B-minus rating of the new package nudged the offering up into the bottom of the highly speculative category.
Both scores, coupled with Moody’s B3 highly speculative rating, show the high risk investors attach to Jeld-Wen, which apparently operated for decades without much debt before borrowing $1.2 billion about six years ago..."
Excerpt: "Jeld-Wen Inc., the ailing Oregon window-and-door giant, sold $448 million in junk bonds Tuesday at an eye-popping price — 12 7/8 percent interest — to enable its takeover by a Canadian firm.
The debt issue saddles the Klamath Falls-based company with high borrowing costs as it struggles to survive continued fallout from the housing-market crash. Jeld-Wen, like a homebuyer with maxed-out credit cards applying for a jumbo loan, must pay a steep price.
But the bond sale clears the way for a crucial bailout by Onex Corp., a private-equity firm that will acquire a majority stake in the company long controlled by the family of Dick Wendt, Jeld-Wen’s co-founder.
Managers of Jeld-Wen, Oregon’s largest privately held company, hadn’t intended to hand over the reins. An initial agreement with Onex would have preserved the family’s controlling stake. But Wendt’s son, Rod Wendt, the company’s current chief executive, agreed to give up the presidency to an Onex man and to accept an increased $864 million investment by the Canadians that will give them a 58 percent stake in Jeld-Wen.
Ultimately, Jeld-Wen loaded more equity and bank financing on top of Tuesday’s bond sale, according to Teri Cline, a company spokeswoman. The company originally circulated a proposed $575 million bond issue, but shrank the offering Monday, ending up Tuesday with gross proceeds of $448 million.
It’s unknown whether Onex boosted its investment still further to help make up the difference, and whether Bank of America, which led the consortium on the bond sale, was the bank loaning more money.
"Due to legal constraints," Cline said, “I am unable to discuss anything else pertaining to the bonds right now.” Onex’s spokeswoman has not returned phone calls in weeks.
Market sources who told The Oregonian of Tuesday’s sale said Jeld-Wen discounted the offering with a 97.4 percent issue price, meaning proceeds came in at $448 million instead of the $460 million face value.
A confidential pricing supplement obtained by the newspaper listed a 12 7/8 percent yield to maturity, due in October 2017. As is customary, the circular did not identify the bond buyers.
Jeld-Wen, under pressure from its banks for violating loan terms, scrambled to repackage its debt issue this month after postponing marketing attempts because of a soft bond market and disappointing reaction to a sales trip last month. To make the junk bonds appealing, the company raised the interest rate from the range initially discussed of 9.5 percent to 9.75 percent.
The repackaged offering persuaded Standard & Poor’s to drop a deathly CCC-plus rating assigned to the original offer. Triple C plus indicates substantial risks, whereas S&P’s B-minus rating of the new package nudged the offering up into the bottom of the highly speculative category.
Both scores, coupled with Moody’s B3 highly speculative rating, show the high risk investors attach to Jeld-Wen, which apparently operated for decades without much debt before borrowing $1.2 billion about six years ago..."
