BEACON ROOFING SUPPLY INC (Form: 8-K, Received: 11/21/2018 08:02:01)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): November 20, 2018

BEACON ROOFING SUPPLY, INC.

(Exact name of Registrant as Specified in Its Charter)

Delaware

000-50924

36-417337

(State or Other Jurisdiction

of Incorporation)

(Commission File Number)

(IRS Employer

Identification No.)

505 Huntmar Park Drive, Suite 300, Herndon, VA 20170

(Address of Principal Executive Offices) (Zip Code)

(571) 323-3939

(Registrant’s telephone number, including area code)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instructions A.2. below):

☐	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐



	Item 1.01	Entry into a Material Definitive Agreement

Beacon Roofing Supply, Inc. (the “Company”) is party to an Investment Agreement, dated as of August 24, 2017 (the “Investment Agreement”), with CD&R Boulder Holdings, L.P. (the “CD&R Stockholder”) and Clayton, Dubilier & Rice Fund IX, L.P. (the “CD&R Fund”) (solely for the purpose of limited provisions therein), pursuant to which the Company issued and sold 400,000 shares of its Series A Cumulative Convertible Participating Preferred Stock, par value $0.01 per share (the “Preferred Stock”), at a purchase price of $1,000 per share, to the CD&R Stockholder. The proceeds from such Preferred Stock purchase were used to finance in part the purchase price for the Company’s acquisition of all of the issued and outstanding shares of capital stock of Allied Building Products Corp., which was completed on January 2, 2018. The CD&R Stockholder and CD&R Fund are entities affiliated with the investment firm Clayton, Dubilier & Rice LLC.

The Investment Agreement includes a standstill provision that restricts the CD&R Fund, the CD&R Stockholder and its affiliated funds (collectively, including the CD&R Fund, “CD&R”) until the later of January 2, 2020 and six months after the date on which CD&R no longer has a designee on the Company’s Board of Directors (the “Company Board”), from acquiring additional equity securities of the Company, subject to an exception that permits the CD&R Stockholder (and its affiliated funds) to purchase shares of common stock, par value $0.01 per share, of the Company (the “Common Stock”) in the open market to the extent acquired solely from cash dividends received on the Preferred Stock. On November 20, 2018, at the request of CD&R, the Company Board consented to the acquisition by CD&R of additional shares of Common Stock in open market purchases or through the use of forward purchase agreements or similar programs with third party financial institutions, provided that the number of shares of Common Stock so acquired by CD&R (such number of shares of Common Stock so acquired, subject to the 30% limitation in this proviso, the “Permitted Acquisition Shares”), when taken together with all other shares of Common Stock beneficially owned by CD&R (including the shares of Common Stock issuable upon conversion of the Preferred Stock beneficially owned by CD&R), does not exceed 30% of the total number of outstanding shares of Common Stock (including the shares of Common Stock issuable upon conversion of the Preferred Stock beneficially owned by CD&R), determined based on the most recent public filing by the Company prior to the date of the relevant acquisition of shares of Common Stock by CD&R.

In addition, on November 20, 2018, the Company entered into a letter agreement with the CD&R Fund and CD&R Stockholder that (i) evidences the Company Board’s prior written approval of CD&R’s acquisition of the Permitted Acquisition Shares and (ii) amends and restates Section 4.9(b) of the Investment Agreement to provide that all shares of Preferred Stock and Common Stock beneficially owned by CD&R (including the Permitted Acquisition Shares) are subject to the transfer restrictions under Section 4.9(b) of the Investment Agreement, which restrict the transfer, sale or other disposition of any such shares at any time to certain prohibited transferees, including persons who beneficially own five percent (5%) or more of any class or series (or the voting power of any class or series) of equity securities of the Company, certain specified competitors of the Company and certain potential activist investors, subject to certain specified exceptions. Other than as expressly modified pursuant to the Letter Agreement, the Investment Agreement remains in full force and effect. The Investment Agreement was filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on August 24, 2017.

T he foregoing description of the Letter Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of the Letter Agreement, which is fi led as Exhibit 10.1 to this Current Report on Form 8-K and incorporated herein by reference.


	Item 9.01	Financial Statements and Exhibits

(d)

Exhibits

Exhibit #

Description

10.1

Letter Agreement, dated as of November 20, 2018, by and among Beacon Roofing Supply, Inc., CD&R Boulder Holdings, L.P. and Clayton, Dubilier & Rice Fund IX, L.P. (solely for the purposes described therein)

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	BEACON ROOFING SUPPLY, INC.

Date: November 21, 2018	By:	/s/ JOSEPH M. NOWICKI
		JOSEPH M. NOWICKI
		Executive Vice President & Chief Financial Officer

Exhibit 10.1

505 Huntmar Park Drive | Suite 300

Herndon, VA 20170

571-323-3939 | www.BECN.com

November 20, 2018

CD&R Boulder Holdings, L.P. and Clayton, Dubilier & Rice Fund IX, L.P.

c/o Clayton, Dubilier & Rice, LLC

375 Park Avenue, 18th Floor

New York, NY 10152

Attn : Nathan K. Sleeper; JL Zrebiec

Email : nsleeper@cdr-inc.com; jzrebiec@cdr-inc.com

Debevoise & Plimpton LLP

919 Third Avenue

New York, New York 10022

Attn : Paul S. Bird; Uri Herzberg

Email : psbird@debevoise.com; uherzberg@debevoise.com

Re: Acquisition of shares of common stock of Beacon Roofing Supply, Inc.

Dear Nate:

Reference is hereby made to that certain Investment Agreement (as amended, supplemented or otherwise modified from time to time, the “ Investment Agreement ”), dated as of August 24, 2017, by and among Beacon Roofing Supply, Inc., a Delaware corporation (the “ Company ”), CD&R Boulder Holdings, L.P., a Cayman Islands exempted limited partnership (“ Purchaser ”), and, solely for purposes of Sections 4.13 and 4.14 thereof, Clayton, Dubilier & Rice Fund IX, L.P. (“ CD&R Fund ”) Capitalized terms used herein without definition shall have the meanings given to them in the Investment Agreement.

I. Company Board Approval Pursuant to Section 4.13(b) of the Investment Agreement

Pursuant to Section 4.13(b) of the Investment Agreement, Purchaser and certain of its affiliates (including CD&R Fund) are, subject to certain exceptions, restricted from acquiring any equity securities of the Company without the prior written approval of the Company Board.

You have informed the Company Board of the desire of CD&R Fund and/or one of more Purchaser Parties (collectively, including Purchaser, the “ CD&R Group ”) to acquire shares of common stock, par value $0.01 per share, of the Company (“ Common Stock ”), in open market purchases or through the use of forward purchase agreements or similar programs with third party financial institutions (any such purchases, collectively “ Open Market Purchases ”), provided that the number of shares of Common Stock so acquired by the CD&R Group (such number of shares of Common Stock so acquired, subject to the 30% limitation described in this proviso, the “ Permitted Acquisition Shares ”), when taken together with all other shares of Common Stock Beneficially Owned (directly or indirectly) by the CD&R Group and the number of shares of Common Stock issuable upon conversion of the Preferred Stock Beneficially Owned (directly or indirectly) by the CD&R Group (in each case, as of the date of the relevant acquisition of shares of Common Stock by the CD&R Group), does not exceed 30% of the sum of the total number of outstanding shares of Common Stock and the number of shares of Common Stock issuable upon conversion of the Preferred Stock Beneficially Owned (directly or indirectly) by the CD&R Group, determined based on the most recent public filing by the Company prior to the date of the relevant acquisition of shares of Common Stock by the CD&R Group.

The EXPERIENCE You Want | The SERVICE You Expect | The VALUE You Deserve

This letter agreement evidences the prior written approval of the Company Board, as contemplated by Section 4.13(b) of the Investment Agreement, to the acquisition of the Permitted Acquisition Shares by one or members of the CD&R Group (including Purchaser) without violating the terms of the Investment Agreement.

In addition, this letter agreement confirms that (i) the Company Board has approved the written approval described in this letter agreement and the acquisition (through Open Market Purchases) by one or members of the CD&R Group (including Purchaser) of the Permitted Acquisition Shares, including for purposes of Section 203 of the Delaware General Corporation Law (the “ DGCL ”), and (ii) in furtherance of the foregoing, the Company Board has approved, under Section 203(a)(1) of the DGCL, the acquisition of the Permitted Acquisition Shares by (x) one or members of the CD&R Group (including Purchaser) and (y) any transferee of such Permitted Acquisition Shares from one or more members of the CD&R Group (including Purchaser) or any of its transferees. Attached to this letter agreement is a copy of the validly approved resolutions of the Company Board approving the matters described in this paragraph.

II. Amendment and Restatement of Section 4.9(b) of the Investment Agreement

In addition, this letter agreement evidences the agreement of the CD&R Group and the Company, in consideration of the Company Board approval of the foregoing matters, to amend and restate Section 4.9(b) of the Investment Agreement in its entirety as follows:

“(b) Notwithstanding Section 4.9(a) , each of CD&R Fund and the Purchaser Parties shall not at any time, directly or indirectly, without the prior written consent of the Company Board excluding the Purchaser Designees, in any single transaction or series of related transactions, Transfer any shares of Preferred Stock or any shares of Common Stock Beneficially Owned, directly or indirectly, by CD&R Fund or the Purchaser Parties:

(1) other than in accordance with all applicable Laws and the other terms and conditions of this Agreement; or

(2) to any Prohibited Transferee, other than any Transfer (i) effected pursuant to an underwritten Block Sale (as defined in the Registration Rights Agreement) or (ii) into the public market pursuant to a bona fide , broadly distributed underwritten public offering, in each case made pursuant to the Registration Rights Agreement.

Each of CD&R Fund and the Purchaser Parties shall not be deemed to have breached their respective obligations under Section 4.9(b)(2) as it relates to Activist Investors with respect to the Transfer of shares of Preferred Stock or shares of Common Stock Beneficially Owned, directly or indirectly, by CD&R Fund or the Purchaser Parties to any Person so long as each of CD&R Fund and the Purchaser Parties, as applicable, act in good faith, based on generally available public information and the advice of its financial advisors, to determine whether such person is an Activist Investor. The reporting by a Person of its ownership of the securities of an issuer on Schedule 13G shall be deemed to establish conclusively that such person is not an Activist Investor with respect to such issuer for purposes of the definition of “Activist Investor”, except to the extent such person subsequently (but prior to such transfer) files a Schedule 13D with respect to such issuer; provided that any such determination for any Person with respect to one issuer shall not preclude such Person from otherwise being an Activist Investor.”

III. Miscellaneous

Except as amended by this letter agreement, all other terms and provisions of the Investment Agreement shall remain in full force and effect.

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The terms of this letter agreement are irrevocable and shall be governed by and construed in accordance with the laws of the State of Delaware, without giving effect to principles or rules of conflict of laws to the extent such principles or rules would require or permit the application of Laws of another jurisdiction. This letter agreement shall bind and inure to the benefit of and be enforceable by the parties hereto and their respective successors and permitted assigns.

This letter agreement constitutes the entire agreement between the parties hereto with respect to the subject matter hereof, and may be amended or modified only in a written instrument executed by the parties hereto. In the event that any provision of this letter agreement is deemed invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions of this letter agreement will not in any way be affected or impaired thereby. For the convenience of the parties, this letter agreement may be executed by PDF, facsimile and in counterparts, each of which shall be deemed to be an original, and all of which, taken together, shall constitute one agreement binding on the parties hereto.

[Signatures follow on next page]

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The EXPERIENCE You Want | The SERVICE You Expect | The VALUE You Deserve

IN WITNESS WHEREOF, the duly authorized representatives of the parties hereto have signed this letter agreement as of the day and year first above written.

Very truly yours,

BEACON ROOFING SUPPLY, INC.

By: /s/ ROSS D. COOPER

Name: Ross D. Cooper

Title: Executive VP, General Counsel & Secretary

Acknowledged and Agreed:

CD&R BOULDER HOLDINGS, L.P.

By: CD&R Investment Associates IX, Ltd., its general partner

By: THERESA A. GORE

Name: Theresa A. Gore

Title: Vice President, Treasurer, & Assistant Secretary

CLAYTON, DUBILIER & RICE FUND IX, L.P.

By: CD&R Associates IX, L.P., its general partner

By: CD&R Investment Associates IX, Ltd., its general partner

By: THERESA A. GORE

Name: Theresa A. Gore

Title: Vice President, Treasurer, & Assistant Secretary

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The EXPERIENCE You Want | The SERVICE You Expect | The VALUE You Deserve