Daily News: August 15, 2018

Credit Suisse, RBC Support NCI, Ply Gem Merger


NCI Building Systems and Ply Gem Parent, manufacturers of exterior building products, have signed a definitive agreement under which the two companies will combine in a stock-for-stock merger. The combined company will have a pro forma enterprise value of $5.5 billion.

“This transformational combination creates the leading exterior building products company with multiple avenues for further growth,” said NCI Chairman James S. Metcalf, who will lead the integration of the two companies and serve as chairman and CEO.

The transaction will create a North American exterior building products platform which provides new construction, as well as repair and remodel solutions for commercial and residential applications. As a larger, vertically-integrated manufacturer with enhanced growth opportunities through adjacent products, the combined company will become a one-stop solution for exterior building envelope needs.

The company will operate under a name to be determined, and each entity will preserve its existing established brands. It will be headquartered in Cary, NC, with a significant presence in Houston.

The company’s pro forma capital structure will include Ply Gem’s existing $1,755 million senior secured term loan and Ply Gem’s existing $645 million of senior unsecured notes, each of which will be assumed by the company following completion of the transaction. The company also expects to incur a $475 million incremental term loan in connection with the transaction, the proceeds of which will be used to retire NCI’s existing term loan, repay any amounts outstanding under NCI’s existing revolving facility and pay transaction fees and expenses. The company will retain Ply Gem’s existing $475 million in aggregate asset-based and cash flow revolving facilities and plans to increase Ply Gem’s existing asset-based revolving facility by $215 million to provide additional working capital capacity and replace NCI’s existing asset-based revolving facility.

Credit Suisse and RBC Capital Markets are providing committed financing for the transaction.

Evercore is serving as exclusive financial advisor and Wachtell, Lipton, Rosen & Katz as legal counsel to NCI. Credit Suisse is serving as exclusive financial advisor to Ply Gem. Debevoise & Plimpton is providing legal counsel to Ply Gem and to Clayton, Dubilier & Rice, which manages funds that own 50% of the company’s common equity.