Headwaters Incorporated, a building products company dedicated to improving lives through innovative advancements in construction materials, announced that it has entered into a new seven-year $425 million senior secured term loan B facility ("Term Loan"). The Term Loan has an initial interest rate of 4.50% based on LIBOR plus 350 basis points, with a 1.0% LIBOR floor (3-month LIBOR is currently 27 bps). Headwaters is using the proceeds of the Term Loan to redeem all of its outstanding 7-5/8% Senior Secured Notes due 2019 in the aggregate principal amount of $400 million (the “Senior Secured Notes”), to pay transaction fees and expenses, and for general corporate purposes.

The Term Loan matures in March 2022, an extension of three years from the April 2019 maturity of our Senior Secured Notes. The Term Loan does not contain any financial maintenance covenants and provides Headwaters with substantial flexibility. More detail regarding the Term Loan will be included in the Company’s related Form 8-K to be filed with the Securities and Exchange Commission.

The combination of repurchasing its 8.75% convertible notes in February with refinancing the Senior Secured Notes reduced Headwaters’ annual cash interest expense run rate to approximately $31 million, from an annual run rate of approximately $47 million at the end of the December 31, 2014 quarter. Headwaters’ pro forma Adjusted EPS for the trailing twelve months ended December 31, 2014 was $1.00, assuming that as of January 1, 2014 our Senior Secured Notes were refinanced and the Company’s outstanding 8.75% convertible notes were repurchased. Headwaters’ weighted average interest rate on long term debt has been reduced to 5.2%, down from a weighted average interest rate of 7.6% at the end of the December 31, 2014 quarter.

In addition to interest savings and extended debt maturities, the Term Loan allows for voluntary principal repayments without early payment premiums. This enables Headwaters to more efficiently de-leverage with free cash flow generated from operations.

The company also recently amended its asset-based loan revolving credit facility, extending its maturity to March 2020, while improving pricing and flexibility.

Deutsche Bank AG New York Branch acted as Sole Arranger and Sole Book-runner for the Term Loan.