NCI Building Systems Inc. (NCS) has priced $250 million worth senior notes of its previously announced private offering to finance the CENTRIA acquisition. The notes carry an interest rate of 8.25% and will mature in 2023.
On Jan 6, 2015, NCI Building had announced its intention to commence a private offering of $250 million of new senior unsecured notes. The company had stated that the net proceeds would be utilized to fund the acquisition, subject to working capital adjustment and inclusive of CENTRIA’s third-party debt repayment, and also to pay fees and expenses associated with the acquisition.
NCI Building entered in an agreement to acquire the Pittsburgh-based CENTRIA for approximately $245 million on Nov 10, 2014. The acquisition is expected to close in the first quarter of fiscal 2015. The move is in sync with NCI Building's strategic objective of targeting above-market growth through organic initiatives as well as synergistic and complementary acquisitions.
The deal is a strategic fit as CENTRIA, like NCI Building, operates an integrated coil coating business that offers a selection of high-quality coatings that meet similar aesthetic and performance criteria. Hence, NCI Building will benefit from CENTRIA’s command in the high-end IMP segment of the nonresidential wall and roof systems market and its highly experienced and proprietary dealer network.
Additionally, Moody's Investors Service – the rating unit of Moody's Corp. (MCO) — assigned a B3 rating to the new $250 million senior unsecured notes. Moody's also raised the rating of NCI Building’s senior secured term loan to Ba3 from B2 and the speculative grade liquidity (SGL) rating to SGL-2 from SGL-3.
NCI Building intends to continue investing in growth initiatives. In addition, the recent booking trends are expected to drive growth. As growth in the nonresidential construction market continues to gain traction, the company remains committed to maintaining commercial discipline and operational efficiency.
Headquartered in Texas, NCI Building Systems is a leading integrated manufacturer of metal products in the North American non-residential construction industry.
Currently, NCI Building Systems carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the same sector include Armstrong World Industries, Inc. (AWI) and Continental Building Products, Inc. (CBPX), both carrying a Zacks Rank #2 (Buy).
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