Huttig Completes New $160 Million Credit Facility

Huttig Building Products Inc. of St. Louis, a domestic distributor of millwork, building materials and wood products, has entered into a new, five-year $160 million asset-based senior secured revolving credit facility. The size of the facility can be increased to $200 million, subject to certain conditions. The initial borrowing availability is based on eligible inventory and accounts receivable. After closing, the company has the right to add a real estate component to increase borrowing availability.

David L. Fleisher, Huttig's chief financial officer, said, "The new credit facility provides the company with additional liquidity, greater financial flexibility and substantially improves our debt structure. It increases our borrowing availability, and reduces both our LIBOR margin pricing, and financial covenant monitoring."

Pricing for the new facility is based at LIBOR plus 100 to 175 basis points, depending on levels of excess availability. Under the prior facility, pricing was LIBOR plus 100 to 200 basis points, depending on levels of certain financial ratios. At closing, the initial pricing is LIBOR plus 100 basis points, compared to LIBOR plus 175 basis points under the prior facility.

Financial covenants in the new facility are limited to a fixed charge coverage ratio to be tested only when excess availability is less than $25 million, and prior to consummation of certain significant business transactions.

In connection with closing the new facility, Huttig terminated a $130 million revolving loan commitment and a $21.4 million term loan under its prior credit facility, which was due to mature in September 2009. The company used proceeds from the new facility to repay revolving credit and term borrowings of approximately $64.8 million under the prior credit facility. In addition, Huttig terminated an interest rate SWAP, scheduled to mature in September 2009, associated with the prior $21.4 million term loan.

The interest rate SWAP termination resulted in a cash gain of approximately $0.6 million that partially offset a non-cash charge of approximately $1.1 for writing off unamortized costs associated with the prior loan facility. The company expects to recognize both the cash gain and the write-off in the 2006 fourth quarter.

The new credit facility was arranged by GE Capital Markets and initially funded by GE Commercial Finance. Following the closing, Huttig anticipates that several commercial banks will also participate as lenders.


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