Industry Headlines

Tuesday, June 16, 2009

TO IMPLEMENT PRE-NEGOTIATED PLAN, COMPANY INITIATES CHAPTER 11 REORGANIZATION PROCEEDINGS

Receives Commitments for $80 Million in DIP Financing

BOISE, Idaho/PRNewswire-FirstCall — Building Materials Holding Corporation (BMHC) a leading provider of building materials and construction services to professional residential builders and contractors, today announced that it has reached agreement with members of its secured lender group on a plan to restructure the Company's balance sheet and provide greater financial flexibility to support its long-term business plan. Under the proposed restructuring plan, BMHC will significantly reduce its outstanding funded debt, establish a new revolving credit facility, and substantially lower annual interest expense upon consummation of the plan.

In order to implement this "pre-negotiated" restructuring plan in an efficient and timely manner, the Company and all of its subsidiaries have voluntarily initiated reorganization proceedings under Chapter 11 of the U.S. Bankruptcy Code in Delaware and have filed a plan of reorganization to implement the restructuring.

BMHC plans to continue to operate as usual while it restructures its balance sheet and will honor all of its commitments to customers. All of the Company's locations are open today and are continuing to serve customers in the normal course.

The Company has received commitments for $80 million in debtor-in-possession (DIP) financing from Wells Fargo Bank and certain of its other existing lenders. Of this amount, $40 million will be immediately available to the Company upon interim Court approval, representing an incremental increase in availability of $20 million from the Company's current $20 million revolver, with the full $80 million accessible to the Company upon final Court approval. The Company expects the new financing to provide ample liquidity to meet its ongoing obligations to employees, customers and suppliers.

Robert E. Mellor, Chairman and Chief Executive Officer, said, "We are very pleased to have reached agreement with representatives of our bank group on a plan that will put our Company in a stronger financial position for the future. Their support, and the fact that our new financing is coming from existing lenders, is a sign that our business partners have confidence in our strength as a company and our long-term potential. BMHC is an industry leader with a strong market niche and well-recognized brands. We pride ourselves on the quality of our products and services, and our customers should know that this will not change while we undergo this restructuring.

"The restructuring will provide us with increased liquidity to navigate the current market challenges while creating a capital structure that will better support our long-term growth objectives. Importantly, this agreement caps a series of actions we have taken to aggressively respond during this unprecedented housing downturn. By lowering costs, aligning our expense structure with reduced demand and selectively scaling back our presence in non-core markets where the prospect of recovery is years away, we have made BMHC a leaner, more competitive company. Coupled with a healthier capital structure, these actions will put us in a solid position to capitalize on opportunities when macroeconomic and market conditions improve. We appreciate the support of our bank group and look forward to completing this process as expeditiously as possible."

The Company today filed a proposed Disclosure Statement and Plan of Reorganization with the court. Under the proposed plan, the Company's existing secured lenders will convert their interests into equity in the newly reorganized company and will receive interests in $135 million in newly issued long-term notes. The Company's unsecured creditors will receive a cash distribution and the right to receive future payments based upon the performance of the Company. The Company's existing equity will be extinguished, and current equity holders will not receive any distributions. The Company anticipates completing the restructuring process in three to four months.

BMHC has filed customary "First Day" motions to support its employees, customers and suppliers during the reorganization process, including motions to allow the Company to continue to pay its employees in the usual manner and to continue without disruption their medical, dental, life insurance, disability and other benefits. The Company does not plan to close any of its facilities or reduce employment levels as a direct result of the filing, though, as always, it will continue to monitor market conditions and make adjustments in its business as necessary. Suppliers will be paid under normal terms for goods and services provided after the filing date of June 16, 2009. Payment for goods and services provided prior to the filing date will be addressed through the Chapter 11 process.