Earlier today, NCI Building Systems (NCS) announced that it has obtained an extension of the waivers granted by its senior credit facility lenders until November 6, 2009, giving it more time to arrange for refinancing. Previously, these waivers had been in effect through August 14, 2009, with an automatic extension to September 15, 2009 upon the signing of a definitive agreement for an equity investment.

The company is in negotiations with the CD&R Fund and some of the company’s existing convertible noteholders regarding potential amendments to the offer contemplated in the investment agreement. The CD&R Fund would continue to invest $250 million in the company through newly issued Convertible Participating Preferred Shares, but for a pro forma ownership of 68.5% instead of 72%.

NCS said that the convertible noteholders would receive $500 cash and 390 shares for each $1000 principal amount tendered in the exchange offer. The terms require the approval of more than two-thirds of the outstanding convertible noteholders. The company said that it got approval from a majority of them, but has not yet reached a final agreement.

Earlier, on August 14, NCS had announced that it has entered into a definitive agreement with Clayton, Dubilier & Rice Fund VIII, L.P. (“the CD&R Fund”), under which the CD&R Fund will invest $250 million in the company by purchasing newly issued convertible participating preferred shares, for a pro forma ownership of 72%.

Completion of this transaction was subject to a number of conditions, including the completion of an exchange offer for the company’s existing convertible notes; completion of the refinancing of the company’s existing senior secured credit facility; entry into a new asset-based revolving credit facility; and other customary closing conditions.

Last week, S&P had downgraded its rating on the company to non-investment grade of “CC” from “CCC+.” The rating agency views this exchange as equivalent to a restructuring and default, since failure to complete the exchange on stated terms will likely result in a bankruptcy filing.
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