Jeld-Wen Could Uptier 2027 Notes Into 2L Debt, Give Term Loans Tighter Credit Agreement to Resolve Near-Term Maturity Wall 

Credit Research: Simran Bal Relevant Items: 10-K Link to Covenants Analysis/Excel Download   Key Takeaways   As Jeld-Wen and a group of its bondholders work with advisors as the company faces a 2027-’28 maturity wall amid weak end market demand, the potential exists for an out-of-court restructuring of the company’s balance sheet.   Octus believes that the potential threat of an aggressive liability management exercise, given Jeld-Wen’s flexible credit documents, could serve as a strong incentive for holders of its term loan and 2027 notes to agree to extend their maturities on negotiated terms, assuming that lenders still believe in the mid-cycle upside potential of the business.   In this vein, we contemplate a potential “simple” LME transaction that would extend Jeld-Wen’s maturity wall and runway. Our prospective transaction includes: An uptier exchange for the 4.875% unsecured notes due 2027 into second lien debt with a 2031 maturity and an interest rate increase; An amend-and-extend for the term loan due 2028 with tighter credit documents protecting against collateral dilution and asset value leakage, among other items, along with an interest rate increase in exchange for a maturity extension to 2031; The extension of its asset-backed credit facility to 2031 in[...]