HDI Completes Novo Building Products Acquisition

Hardwoods Distribution Inc. (HDI) has completed its previously announced acquisition of Novo Building Products Holdings, LLC’s equity interests.

The acquisition was completed for US$302 million with an effective closing date of July 30, 2021.

“This is a transformative acquisition for the Company,” HDI’s President and Chief Executive Officer, Rob Brown, stated.

“Novo significantly broadens our addressable market, providing turnkey access into the home center and home builder distribution customer segments. We believe the combined scale and sophistication of HDI and Novo creates a national platform to provide additional solutions to our customers, and allows us to capitalize on the market share opportunity available. The multi-year outlook for our products and the end markets we participate in is very attractive, with strong demand driving new residential, repair and remodel and commercial building expenditures. Millennials represent the largest demographic segment of the population and are now entering peak home-buying years, complemented by historically low-interest rates and rising home equity levels that support spending. We see significant growth opportunities ahead as we continue to build HDI as a world-class distributor of architectural building products for the benefit of our customers, vendor partners, employees and shareholders.”

In connection with the acquisition, HDI agreed to a new credit facility with its existing lender, Bank of America, N.A. Due to strong demand from the syndicate of underwriters, the senior secured facility was increased to US$600 million from the previously announced US$525 million.

The New Credit Facility was used to refinance the outstanding debt of certain of the Company’s subsidiaries as well as to fund the Novo purchase price.

The New Credit Facility consists of I a US$225 million revolving credit facility that can be drawn on in both US and Canadian dollars, and (ii) a US$375 million term loan.

The Credit Facility bears interest at a rate equal to LIBOR plus up to 2.25 percent or the Lender’s current base rate of interest plus 1.0 percent.

The LIBOR and Base Rate margins for the New Credit Facility are subject to performance pricing adjustments based on the Company’s then-applicable leverage ratio from time to time.

HDI is a major distributor of architectural grade building and millwork products to the residential, repair and remodel, and commercial construction industries in North America.

The company currently operates an 84-distribution-facility network in North America.