Amendment and Extension of US Credit
Facility
LANGLEY, BC, Oct. 15, 2019 /CNW/ - Hardwoods Distribution Inc.
("HDI" or the "Company") (TSX: HDI) announced today that it has
entered into an agreement to acquire substantially all of the
assets, and assume certain liabilities, of Pacific Mutual Door
Company ("Pacific") (the "Transaction").
Pacific is a wholesale distributor of interior and exterior
doors, custom millwork, and other ancillary building products. For
the trailing twelve-month period ended July
2019 Pacific's revenues were US$58
million.
Pacific operates five strategically located facilities in
Nashville, TN, Kansas City, MO, Olathe, KS, Osborne,
KS, and Albuquerque, NM. It
has a diversified sales strategy and its customer base includes
general contractors, builders, distributors, and professional
dealers. Pacific has been in operation for over one hundred years
and is a significant distributor in the markets it serves.
"We are very pleased to announce the acquisition of Pacific
Mutual Door and Window, a market leader that operates a highly
profitable business model," said Rob
Brown, President and CEO of HDI. "Pacific compliments HDI's
existing door and related millwork business and provides an entry
point into the attractive Tennessee and Kansas markets, with minimal customer overlap
and alignment of key supplier relationships. The Transaction is
immediately accretive to shareholders."
The purchase price payable by HDI is US$34.5 million and other consideration.
Completion of the Transaction is subject to a number of conditions
customary for a transaction of this nature. The Transaction is
expected to close in October
2019.
"We have been successful with our acquisition strategy having
added over $600 million of annual
sales in the last eight years. Our acquisitions pipeline remains
very active at this time. We will continue to pursue additional
transactions that complement our internal growth strategies," said
Mr. Brown.
Credit Facility
HDI has received a term sheet from its US bank to increase its
existing revolving credit facility (the "Credit Facility")
from US$125 million to US$150 million, to extend the maturity of the
facility from July 2021 to
October 2024, and to reduce borrowing
rates under the facility. The Credit Facility will be used by the
Company to pay the purchase price for the Transaction.
About HDI
HDI is North America's largest
wholesale distributor of architectural grade building products to
the residential and commercial construction sectors. The Company
operates a North American network of 62 distribution centres, as
well as one sawmill and kiln drying operation.
Forward-Looking Statements
Certain statements in this news release may constitute
"forward-looking information" within the meaning of applicable
securities laws that involve known and unknown risks, uncertainties
and other factors that may cause actual results, performance or
achievements or industry results to be materially different from
any future results, performance or achievements or industry results
expressed or implied by such forward-looking information.
Forward-looking information is identified by the use of terms and
phrases such as "anticipate", "believe", "could", "estimate",
"expect", "intend", "may", "plan", "predict", "project", "will",
"would", and similar terms and phrases, including references to
assumptions. Such information may involve, but is not limited to,
comments with respect to strategies, expectations, planned
operations or future actions. Forward-looking information in this
news release includes, without limitation, statements with respect
to: the expected closing date of the Transaction the amount, terms
and timing of the Credit Facility expected accretion; and, future
acquisitions. Actual events or results may differ materially.
The forward-looking information in this news release are based
on assumptions which include, but are not limited to: the
satisfaction of the closing conditions and the closing of the
Transaction; no undisclosed liabilities associated with the
Transaction; there are no material exchange rate fluctuations
between the Canadian and US dollar that affect the Company's
performance; the general state of the economy does not worsen; the
Company and Pacific do not lose any key personnel; there are no
decreases in the supply of, demand for, or market values of
hardwood lumber or sheet goods that harm the Company's business;
the Company does not incur material losses related to credit
provided to its customers; the Company's products are not subjected
to negative trade outcomes; the Company is able to sustain its
level of sales and earnings margins; the Company is able to grow
its business long term and to manage its growth; the Company is
able to integrate acquired businesses; there is no new competition
in the markets in which the Company operates that lead to reduced
sales and profitability; the Company can comply with existing
regulations and will not become subject to more stringent
regulations; no material product liability claims; importation of
products manufactured with hardwood lumber or sheet goods does not
increase and replace products manufactured in North America; the Company's management
information systems upon which it is dependent are not impaired;
and, the Company's insurance is sufficient to cover losses that may
occur as a result of its operations.
The forward-looking information in this news release are subject
to risks, uncertainties and other factors that could cause actual
results to differ materially from historical results or results
anticipated by the forward-looking information. The factors which
could cause results to differ from current expectations include,
but are not limited to: failure to close the Credit Facility;
failure to close the Transaction; potential undisclosed liabilities
associated with the Transaction; exchange rate fluctuations between
the Canadian and US dollar could affect the Company's performance;
the Company's results are dependent upon the general state of the
economy; the Company depends on key personnel, the loss of which
could harm its business; decreases in the supply of, demand for, or
market values of hardwood lumber or sheet goods could harm the
Company's business; the Company may incur losses related to credit
provided to the Company's customers; the Company's products may be
subject to negative trade outcomes; the Company may not be able to
sustain its current level of sales or earnings margins; the Company
may be unable to grow its business long term or to manage any
growth; the Company may be unable to integrate acquired businesses;
competition in the Company's markets may lead to reduced sales and
profitability; the Company may fail to comply with existing
regulations or become subject to more stringent regulations;
product liability claims could affect the Company's sales,
profitability and reputation; importation of products manufactured
with hardwood lumber or sheet goods may increase, and replace
products manufactured in North
America; the Company is dependent upon its management
information systems; the Company's insurance may be insufficient to
cover losses that may occur as a result of the Company's
operations; the Company's credit facilities affect its liquidity,
contain restrictions on the Company's ability to borrow funds, and
impose restrictions on distributions that can be made by certain
subsidiaries of the Company; the market price of the Company's
common shares will fluctuate; and there is a possibility of
dilution of the Company's existing shareholders. More information
about the risks and uncertainties affecting Hardwoods' business can
be found in the "Risk Factors" section of its Annual Information
Form dated March 14, 2019 which is
available under the Hardwoods' profile on SEDAR at
www.sedar.com.
Although Hardwoods has attempted to identify factors that would
cause actual actions, events or results to differ materially from
those disclosed in the forward-looking or information in this news
release, there may be other factors that cause actions, events or
results not to be as anticipated, estimated or intended. Also, many
of the factors are beyond the control of Hardwoods. Accordingly,
readers should not place undue reliance on forward-looking
information in this news release. The forward-looking information
is made as of the date of this news release, and Hardwoods assumes
no obligation to publicly update or revise such forward-looking
information to reflect new information, subsequent or otherwise,
except as may be required by applicable securities law. The
forward-looking information contained herein is expressly qualified
in its entirety by this cautionary statement.
SOURCE Hardwoods Distribution Inc.