Jeld-Wen plans to shrink bond issue to US$450M from US$575M, must complete sale to qualify for planned US$864M takeover by Onex

LOS ANGELES , September 28, 2011 () – Jeld-Wen Inc. of Klamath Falls, Oregon, hopes to attract investors by shrinking a junk-rated bond issue and offering higher interest rates, according to a report by The Oregonian.

The window and door manufacturer has agreed to be taken over by Canadian private equity firm Onex, and earlier this month denied reports that it was facing bankruptcy. Jeld-Wen has a debt of about $1.2 billion, much of which dates from the acquisition of Danish manufacturer Vest-Wood in 2005.

Jeld-Wen is under pressure from banks for violating loan terms, and must complete the bond sale if it is to qualify for a rescue by Onex. Market sources say Jeld-Wen now intends to offer US$450 million in bonds instead of the $575 million originally planned.

The latest changes represent Jeld-Wen's second major switch in its attempts to complete the deal with Onex, which has agreed to pay $864 million for the majority stake. The first deal would have allowed Jeld-Wen to remain under family control, while the second proposed to grant Onex a 58% stake in return for a larger investment and bridge loan.

The latest package offers senior secured notes due by 2017 instead of 2018. It has earned a slightly higher rating than the original offer at B3/B-minus instead of B3/CCC-plus, but still falls into the junk category.

Traders are reportedly discussing interest rates in a 12-13% range, according to insiders, significantly higher than the 9.5-9.75% range reported by New York financial tracker Debtwire. The rates are an indication of the high level of risk that investors associate with Jeld-Wen.

Jeld-Wen spokeswoman Teri Cline would not comment on the issue, but did confirm an unrelated report by the Portland Business Journal that Jeld-Wen must pay $850,000 in fines to settle allegations that it violated the federal Clean Air Act in four states.

The report said Jeld-Wen entered a consent decree last month following allegations that it failed to install pollution controls within a required timeframe at plants in Washington, West Virginia, Iowa and South Carolina.

The primary source of this article is The Oregonian, Portland, Oregon, on Sept. 26, 2011.

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