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Window maker Jeld-Wen nears deal for fresh capital
A growing roster of debt-laden firms are buckling under the weight of a slowdown in the construction industry and high borrowing costs
New Jeld-Wen windows sit outside an apartment building under construction. (Daniel Acker/Bloomberg)
Key Takeaways:
- Jeld-Wen and some creditors are negotiating an amend-and-extend deal that could add new capital and elevate unsecured bondholders to first-lien status.
- The company carries $1.25 billion in debt and faces soft construction demand, though its debt prices have rebounded as restructuring risks eased.
- The proposal would let first-lien lenders extend at par or exit at a discount, while new financing supports repayments and liquidity.
Window and door manufacturer Jeld-Wen Holding Inc. and some of its creditors are hashing out an amend-and-extend transaction that may include an injection of fresh capital from unsecured creditors that would allow them to gain secured status.
Lenders to the first-lien loan due in 2028 have the option to either extend their holdings at par or be repaid at a discount, according to people familiar with the situation, who asked not to be identified discussing a private matter. Proceeds from the new money will be used to cash out lenders who don’t extend their debt and also bolster the balance sheet, they said.
A component of the plan also calls for unsecured noteholders to move up the repayment line to a first-lien position, which will give them equal footing with existing term loan lenders, said the people.
A group of lenders retained Moelis & Co. as financial adviser and Gibson Dunn & Crutcher as legal counsel, while a group of unsecured bondholders is working with Houlihan Lokey Inc. and Davis Polk & Wardwell. Jeld-Wen has tapped investment bank Evercore Inc., Bloomberg reported.
Representatives for Moelis and Houlihan declined to comment, while messages left with Jeld-Wen, Gibson Dunn, Davis Polk and Evercore were not returned.
Jeld-Wen is part of a growing roster of debt-laden firms buckling under the weight of a slowdown in the construction industry and high borrowing costs. The company saw a slight revenue drop in the second quarter, falling 0.7% from a year earlier, due to softening demand and cost pressures. It posted $817.8 million of revenue and a net loss of $31.5 million in the quarter.
“Overall market volumes remain soft, but the pace of the year-over-year decline is beginning to moderate,” CEO William J. Christensen said during its second-quarter earnings call in August.
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Jeld-Wen, which listed total debt at $1.25 billion as of the second quarter, has seen its debt rally in recent months as its financials stabilized and the risk of restructuring lowered. Its $400 million unsecured note due in December 2027 changed hands at 90 cents on the dollar last week, up from 61.5 cents on April 2, according to pricing firm Trace. Its $374 million term loan is quoted at 87 cents, up from 75.25 cents on April 6, according to data compiled by Bloomberg.
On the refinancing front, Christensen said the firm’s “objective is to preserve liquidity, maintain financial flexibility, and provide the company with sufficient time to continue improving performance as market conditions stabilize.”
Jeld-Wen ranks No. 24 on the Transport Topics list of top building materials carriers.
