Press Releases

11.28.08Masonite International Inc. Enters Into an Amendment to Its Credit Agreement and an Extension of the Forbearance Agreement with Bank Lenders

 

MISSISSAUGA, ON, November 28, 2008 - Masonite International Inc. (the “Company”) today announced that on November 25, 2008 it entered into an amendment to its credit agreement and an extension of the forbearance agreement dated September 16, 2008, with its bank lenders. This extension provides the Company time to develop a revised business plan for 2009, which will serve as the basis of its efforts to create an appropriate capital structure to support Masonite’s long-term business objectives.

As previously announced, as a result of its financial performance for the quarters ended June 30 and September 30, 2008, Masonite was not in compliance as of such dates with certain financial covenants contained in its credit facility, which constituted an event of default under the credit facility. The financial covenants relate to EBITDA metrics and reflect the challenging conditions in the U.S. housing industry. Masonite is engaged in ongoing negotiations with lenders that are party to the credit facility regarding a potential amendment to the terms of the credit facility. There is no assurance that the negotiations with lenders will result in an amendment acceptable to Masonite and to its lenders.

Pursuant to the amendment, which is effective November 25, 2008, neither the administrative agent nor the lenders will (i) take action to accelerate the maturity of or terminate the Company’s revolving credit facility or to otherwise enforce payment of the Company’s obligations under the credit agreement, or (ii) exercise any other rights and remedies available to them under the credit agreement or applicable law. The forbearance agreement applies to the non-compliance of the covenants as of June 30 and September 30, 2008. The forbearance agreement termination date is the earliest of December 19, 2008, any other Event of Default, and any Termination Event as defined in the Bondholder Forbearance Agreement dated November 17, 2008 (and described below). The forbearance agreement can also be terminated if the Company fails to deliver certain financial information by agreed upon dates.

The amendment with the lenders provides for the December 19, 2008 deadline to be further extended to January 15, 2009, provided that Masonite: (1) delivers a draft business plan by December 19, 2008, (2) reviews the plan with the bank lenders by December 22, 2008, (3) delivers a final business plan by January 15, 2009; and (4) complies with a number of other provisions related to the negotiation of a consensual restructuring plan. For a description of such provisions and a copy of the forbearance agreement, please see Masonite International Inc.'s report on Form 6-K dated November 28, 2008 filed with the Securities and Exchange Commission and available at www.sec.gov.

“We are pleased to reach this extension of the forbearance agreement with our bank lenders, which provides us with additional time to reassess our 2009 and longer-term business plans given the rapidly changing economic environment,” said Fred Lynch, President and Chief Executive Officer of Masonite International Inc. “We intend to use this time to develop a solid and realistic business plan for 2009 and beyond, thereby providing us with the basis to negotiate an appropriate capital structure that will support our long-term strategic plans. With our excellent market position, strong brand, and industry-leading products, we believe we are well-positioned to take advantage when the market rebounds. In the meantime, we remain focused on delivering the highest value door products to our customers around the world.”

In addition, pursuant to the amendment, the Company agreed to a 2% increase in the interest rate under the credit agreement which increase is payable in the form of additional indebtedness.

As previously announced, on November 17, 2008, Masonite entered into a separate forbearance agreement with holders of a majority of the senior subordinated notes due 2015 issued by two of the Company’s subsidiaries (the “Bondholder Forbearance Agreement”). Under terms of the Bondholder Forbearance Agreement, which is effective through December 31, 2008, the noteholders executing the Bondholder Forbearance Agreement agreed that during such period they will not exercise rights and remedies against the Company solely with respect to the Company’s failure to make the interest payment due on October 15, 2008. For a description of such events and a copy of the Bondholder Forbearance Agreement, please see Masonite International Inc.'s report on Form 6-K dated November 17, 2008 filed with the Securities and Exchange Commission and available at www.sec.gov.

This press release is also available within the “News & Events” section of the Company’s website at www.masonite.com.

Masonite International is a leading global manufacturer of residential and commercial doors, committed to providing the highest value door products to our customers in more than 70 countries around the world.