(UFPI) Universal Forest Products Issues Debt – Announces Acquisition

Universal Forest Products, Inc. (UFPI) is all set to restructure a part of its long-term debt as the company recently announced its loan agreement with Prudential Investment Management.

The company issued notes worth $75 million, comprising $35 million of 10-year 3.89% Series A Senior Notes and $40 million of unsecured 3.98% 12-year Series B Senior Notes. The proceeds received from Prudential Investment Management will be utilized primarily for refinancing $40 million of the company’s 6.16% Series 2002-A Senior Notes.

Moreover, a portion of the proceeds will be utilized for repaying debts related to the Nepa Pallet and Container Co. acquisition while funds for the acquisition of Custom Caseworks, Inc. will also come from the same source. The latter specializes in the manufacturing of point-of-purchase and commercial store fixtures, commercial casework and office furniture, laminated and painted wood panels, and OEM-manufactured and private label products.

Both the acquisitions, Nepa Pallet and Container Co. and Custom Caseworks Inc., are in accordance with the company’s expansionary policy — development of industrial business, entry into market without adding capacities and to grow through acquisitions.

Universal Forest Products Inc. manufactures, treats, distributes, and installs lumber, composite wood, plastic and other building products. The current Zacks Consensus Estimate for the fourth quarter 2012 is 2 cents while that for 2012 and 2013 are $1.20 and $1.81, respectively, reflecting year-over-year growth of 273.4% for 2012 and 51.5% for 2013.

We currently have an Underperform recommendation on Universal Forest while the stock also bears a Zacks #5 Rank, implying a short-term Strong Sell rating. The company competes with the likes of  Bluelinx Holdings Inc. (BXC) and Louisiana-Pacific Corp. (LPX), among the other players of the industry.

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