BlueLinx Announces Closing of Sale-Leaseback Transactions for $27.2 Million Net Proceeds

BlueLinx Holdings Inc. (the “Company”), a leading distributor of building and industrial products in the United States, announced that it has completed sale-leaseback transactions for aggregate net cash proceeds of $27.2 million, which were used to repay indebtedness under the Company’s term loan.  The transactions closed on December 31, 2019.

The four facilities included in these sale-leaseback transactions are located in Kansas City, Missouri; Nashville, Tennessee; Richmond, Virginia; and St. Louis, Missouri.  As a part of the transactions, the Company entered into lease agreements for each of the properties for initial terms of 18 years, demonstrating its long-term commitment to each of these local markets.

Management Commentary

Mitch Lewis, President and Chief Executive Officer, stated, “I am very pleased to announce the closing of these latest sale-leaseback transactions, which generated $27.2 million in net cash proceeds for debt repayment.  As we have consistently stated, deleveraging is a priority, and a key path to achieving this objective has been through the successful monetization of our owned real estate portfolio.

“We remain in active and ongoing discussions with other sale-leaseback and outright sale opportunities, and believe these efforts should generate additional meaningful debt reduction in the first quarter.”

Term Loan Amendment

Concurrent with the sale-leaseback transactions, the Company entered into an amendment to its term loan facility that gives the Company until March 27, 2020, to satisfy the designated term loan principal balance of $95.3 million to maintain the leverage covenant levels established in the third amendment to the facility.  The amount of additional principal repayment to reach that level was reduced to approximately $23.7 million following the term loan repayment described above, and can be satisfied with proceeds from real estate transactions and asset sales, as well as voluntary prepayments using cash on hand or funds from its revolving credit facility.  Among other things, the amendment provides the Company additional flexibility and time to maximize sale proceeds and obtain better cap rates for the other sale-leaseback and outright sale opportunities that it is currently pursuing.

Supplemental Information

As the Company has noted previously, the calculation of the leverage ratio under its term loan facility for any period is generally determined by taking the Company’s “Consolidated Total Debt” and dividing it by the Company’s “Consolidated EBITDA,” as those terms are defined in the term loan agreement.

“Consolidated Total Debt” is generally determined by adding the balance of the Company’s term loan, the prior month’s average balance of its revolving credit facility, and its equipment finance lease liability, and reducing that amount by unrestricted cash up to $10.0 million.  At September 28, 2019, the Company’s term loan balance was $147.2 million, the average balance of its revolving credit facility was $357.9 million, its equipment finance lease liability was $34.4 million, and its unrestricted cash was $10.0 million.  Liabilities related to sale-leaseback transactions are excluded from the calculation.  Following the term loan repayment described above, the Company’s term loan balance is approximately $119.0 million.

Consolidated EBITDA is generally determined by taking the Adjusted EBITDA that the Company reports, and adding additional adjustments and add-backs specified by the term loan agreement.  The Company anticipates that the adjustments and add-backs to Adjusted EBITDA for calculating Consolidated EBITDA under the term loan will be approximately $5 million to $7 million at the Company’s 2019 fiscal year end.

About BlueLinx Holdings Inc.

BlueLinx (NYSE: BXC) is a leading wholesale distributor of building and industrial products in the United States with over 50,000 branded and private-label SKUs, and a broad distribution footprint servicing 40 states. BlueLinx has a differentiated distribution platform, value-driven business model and extensive cache of products across the building products industry. Headquartered in Marietta, Georgia, BlueLinx has over 2,200 associates and distributes its comprehensive range of structural and specialty products to approximately 15,000 national, regional, and local dealers, as well as specialty distributors, national home centers, industrial, and manufactured housing customers. BlueLinx encourages investors to visit its website, www.BlueLinxCo.com, which is updated regularly with financial and other important information about BlueLinx.

Contact:

Susan O’Farrell – Sr. Vice President, CFO & Treasurer – (770) 953-7000

Source: BlueLinx Holdings, Inc.