sc13da107785002_10292009.htm

0000921895-09-002658.txt : 20091030 0000921895-09-002658.hdr.sgml : 20091030 20091030090029 ACCESSION NUMBER: 0000921895-09-002658 CONFORMED SUBMISSION TYPE: SC 13D/A PUBLIC DOCUMENT COUNT: 2 FILED AS OF DATE: 20091030 DATE AS OF CHANGE: 20091030 SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: Builders FirstSource, Inc. CENTRAL INDEX KEY: 0001316835 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-LUMBER & OTHER BUILDING MATERIALS DEALERS [5211] IRS NUMBER: 522084569 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D/A SEC ACT: 1934 Act SEC FILE NUMBER: 005-81419 FILM NUMBER: 091146163 BUSINESS ADDRESS: STREET 1: 2001 BRYAN STREET, SUITE 1600 CITY: DALLAS STATE: TX ZIP: 75201 BUSINESS PHONE: (214) 880-3500 MAIL ADDRESS: STREET 1: 2001 BRYAN STREET, SUITE 1600 CITY: DALLAS STATE: TX ZIP: 75201 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: STADIUM CAPITAL MANAGEMENT LLC CENTRAL INDEX KEY: 0001105087 IRS NUMBER: 770500018 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D/A BUSINESS ADDRESS: STREET 1: 19785 VILLAGE OFFICE COURT STREET 2: STE 101 CITY: BEND STATE: OR ZIP: 97702 BUSINESS PHONE: 6503214000 MAIL ADDRESS: STREET 1: 19785 VILLAGE OFFICE COURT STREET 2: STE 101 CITY: BEND STATE: OR ZIP: 97702 SC 13D/A 1 sc13da107785002_10292009.htm sc13da107785002_10292009.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 13D

(Rule 13d-101)

INFORMATION TO BE INCLUDED IN STATEMENTS FILED PURSUANT

TO § 240.13d-1(a) AND AMENDMENTS THERETO FILED PURSUANT TO

§ 240.13d-2(a)

(Amendment No. 1)1

Builders FirstSource, Inc.

(Name of Issuer)

Common Stock, par value $0.01 per share

(Title of Class of Securities)

12008R107

(CUSIP Number)

STEVEN WOLOSKY, ESQ.

OLSHAN GRUNDMAN FROME ROSENZWEIG & WOLOSKY LLP

Park Avenue Tower

65 East 55th Street

New York, New York 10022

(212) 451-2300

(Name, Address and Telephone Number of Person

Authorized to Receive Notices and Communications)

October 29, 2009

(Date of Event Which Requires Filing of This Statement)

If the filing person has previously filed a statement on Schedule 13G to report the acquisition that is the subject of this Schedule 13D, and is filing this schedule because of §§ 240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check the following box ¨.

Note: Schedules filed in paper format shall include a signed original and five copies of the schedule, including all exhibits. See § 240.13d-7 for other parties to whom copies are to be sent.

_______________

1 The remainder of this cover page shall be filled out for a reporting person’s initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page.

The information required on the remainder of this cover page shall not be deemed to be “filed” for the purpose of Section 18 of the Securities Exchange Act of 1934 (“Act”) or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes).

CUSIP NO. 12008R107

1	NAME OF REPORTING PERSON Stadium Capital Management, LLC
2	CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP		(a) x (b) o
3	SEC USE ONLY
4	SOURCE OF FUNDS AF
5	CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) OR 2(e)		¨
6	CITIZENSHIP OR PLACE OF ORGANIZATION Delaware
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH	7	SOLE VOTING POWER -0-
	8	SHARED VOTING POWER 5,367,140(1)
	9	SOLE DISPOSITIVE POWER -0-
	10	SHARED DISPOSITIVE POWER 5,367,140(1)
11	AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 5,367,140(1)
12	CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES		o
13	PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 14.9%
14	TYPE OF REPORTING PERSON OO, IA

(1) Includes 1,786,442 Shares held in client accounts for which SCM is the investment adviser.

CUSIP NO. 12008R107

1	NAME OF REPORTING PERSON Bradley R. Kent
2	CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP		(a) x (b) o
3	SEC USE ONLY
4	SOURCE OF FUNDS AF
5	CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) OR 2(e)		¨
6	CITIZENSHIP OR PLACE OF ORGANIZATION United States
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH	7	SOLE VOTING POWER -0-
	8	SHARED VOTING POWER 5,367,140
	9	SOLE DISPOSITIVE POWER -0-
	10	SHARED DISPOSITIVE POWER 5,367,140
11	AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 5,367,140
12	CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES		o
13	PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 14.9%
14	TYPE OF REPORTING PERSON IN

CUSIP NO. 12008R107

1	NAME OF REPORTING PERSON Alexander M. Seaver
2	CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP		(a) x (b) o
3	SEC USE ONLY
4	SOURCE OF FUNDS AF
5	CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) OR 2(e)		¨
6	CITIZENSHIP OR PLACE OF ORGANIZATION United States
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH	7	SOLE VOTING POWER -0-
	8	SHARED VOTING POWER 5,367,140
	9	SOLE DISPOSITIVE POWER -0-
	10	SHARED DISPOSITIVE POWER 5,367,140
11	AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 5,367,140
12	CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES		o
13	PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 14.9%
14	TYPE OF REPORTING PERSON IN

CUSIP NO. 12008R107

1	NAME OF REPORTING PERSON Stadium Relative Value Partners, L.P.
2	CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP		(a) o (b) x
3	SEC USE ONLY
4	SOURCE OF FUNDS WC
5	CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) OR 2(e)		¨
6	CITIZENSHIP OR PLACE OF ORGANIZATION California
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH	7	SOLE VOTING POWER -0-
	8	SHARED VOTING POWER 3,580,698
	9	SOLE DISPOSITIVE POWER -0-
	10	SHARED DISPOSITIVE POWER 3,580,698
11	AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 3,580,698
12	CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES		o
13	PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 9.9%
14	TYPE OF REPORTING PERSON PN

CUSIP NO. 12008R107

The following constitutes Amendment No. 1 to the Schedule 13D filed by the undersigned (“Amendment No. 1”). This Amendment No. 1 amends the Schedule 13D as specifically set forth.

Item 4. Purpose of Transaction

Item 4 is hereby amended to add the following:

On October 29, 2009, SCM sent a letter (the “October Letter”) to the Board of the Issuer expressing its continuing concerns with both the recapitalization (the “Recapitalization”) recently announced in response to the proposal made by controlling stockholders, Warburg and JLL, and the ongoing governance of the Issuer. In the October Letter, SCM stated that it is considering, among other things, intervening in the pending litigation and asserting objections to the potential settlement of shareholder lawsuits announced.

As expressed in the October Letter, SCM’s concerns regarding the Recapitalization and the Issuer’s governance include SCM’s belief that in spite of the various reasons cited in the Issuer’s October 23, 2009 announcement, the Issuer does not need to effect a recapitalization now, and certainly not on the terms outlined in the Recapitalization announcement. SCM continues to be concerned regarding the unfair terms of the Recapitalization, including a Rights Offering price at $3.50 per share, which represents a discount of more than 50% to the average price of the Issuer’s stock for the 30 days prior to the initial Warburg/JLL announcement, and the current plan for the proceeds to be used by the Issuer to offer to repurchase or redeem the Issuer’s Notes, which would significantly benefit JLL and Warburg. SCM also believes that the Recapitalization remains an extraordinary example of fiduciary conflicts and self-dealing by Warburg and JLL. SCM continues to be concerned about the extraordinary conflicts of interest at the Issuer Board level, and believes that in order to restore stockholder confidence in the governance and fiduciary capabilities of the Issuer’s Board, the Board should be reconfigured to include at least two truly independent stockholder representatives.

The foregoing description of the October Letter is not complete and is qualified in its entirety by reference to its full text. A copy of the October Letter is filed as Exhibit 99.1 hereto and is incorporated herein by reference.

Item 7. Material to Be Filed as Exhibits

Item 7 is hereby amended to add the following exhibit:

99.1 Letter, dated October 29, 2009, to the Board of Directors of Builders FirstSource, Inc.

CUSIP NO. 12008R107

SIGNATURES

After reasonable inquiry and to the best of my knowledge, I certify that the information set forth in this statement is true, complete and correct.

Dated: October 29, 2009

STADIUM CAPITAL MANAGEMENT, LLC


By:	/s/ Bradley R Kent	/s/ Alexander M. Seaver
	Bradley R. Kent, Manager	ALEXANDER M. SEAVER


		/s/ Bradley R Kent
		BRADLEY R. KENT

STADIUM RELATIVE VALUE PARTNERS, L.P.

By:	Stadium Capital Management, LLC


	By:	/s/ Bradley R Kent
		Bradley R Kent, Manager

EX-99.1 2 ex991to13da107785002_102909.htm ex991to13da107785002_102909.htm

Exhibit 99.1

[STADIUM CAPITAL MANAGEMENT, LLC LETTERHEAD]

October 29, 2009

VIA FACSIMILE (214-880-3599) AND FEDERAL EXPRESS

Board of Directors

c/o Floyd Sherman, Chief Executive Officer, President & Director

Builders FirstSource, Inc.

2001 Bryan Street, Suite 1600

Dallas, Texas 75201

Gentlemen:

We remain the largest unaffiliated shareholders of Builders FirstSource, Inc. (“BLDR” or the “Company”), with a 14.9% ownership position. We are pleased that the Special Committee has implemented some of the suggestions we made in our letter dated September 24, 2009. Nevertheless, we are writing to express our continuing concerns with both the recapitalization (the “Recapitalization”) recently announced and the ongoing governance of the Company. We remain deeply disappointed that the Special Committee has elected to support the Recapitalization, which is unfair to current unaffiliated BLDR shareholders. In fact, only a director who could both protect an equity position by participating in the rights offering AND who owns BLDR Second Priority Senior Floating Rate Notes (“Notes”) purchased at a discount, would have the economic rationale to approve the Recapitalization.

As we noted in our letter of September 24th, our firm does not have a history of activist or litigious behavior. The situation here, however, continues to cause us profound concerns, and we are considering our options, including without limitation intervening in the pending litigation and asserting objections to the potential settlement of shareholder lawsuits announced.

1. The Recapitalization

We reiterate our view that BLDR, in spite of the various reasons cited in the October 23rd announcement, does not need to effect a recapitalization now, and certainly not on the terms outlined in the Recapitalization announcement.

Management’s, and the Special Committee’s, most recent statements about the dramatic deterioration in the U.S. residential housing industry since the Company’s July 24, 2009 shareholder call remain disingenuous, while also calling into question the integrity of management comments in general (we will certainly be watching vigilantly for any management stock option grants at the depressed Warburg/JLL-induced stock price). The data simply do not support management’s “revised” views of the U.S. housing market.

Just last week, existing home sales were announced to have increased to the highest level in two years, median prices fell at the slowest pace in a year and the inventory of unsold homes declined 7.5%, creating the lowest months’ supply level since March 2007. All these data points support an improvement in the overall housing market since mid summer, not a deterioration.

While BLDR’s management team highlighted their newfound concerns over a “W”-shaped recovery in housing, they still believe the housing market will improve over the next year:

Charles Horn, BLDR’s CFO, on last week’s Q3 2009 earnings call said “while we are forecasting there could be declines in starts in Q4 and Q1, that’s not saying that we don’t believe that 2010 overall cannot be better than 2009”

Floyd Sherman, BLDR’s CEO, further noted that the apparent weakness they saw in August could have been the result of “extreme weather” and that “it’s hard to differentiate between pure weather versus pending expiration of the credit”, a credit which appears likely to be extended through June 2010.

The terms of the Recapitalization, although certainly an improvement from the initial and egregiously self-serving proposal made by Warburg Pincus Private Equity IX, L.P. (“Warburg”) and JLL Partners Fund V, L.P. (“JLL”), are inappropriate. We remain confused about how the Special Committee can recommend a Rights Offering at $3.50 per share, which represents a discount of more than 50% to the average price of BLDR stock for the 30 days prior to the initial Warburg/JLL announcement.

Even if BLDR elects to proceed with the rights offering portion of the Recapitalization, there is no valid reason to use proceeds from any rights offering to repurchase or redeem the Notes. If BLDR’s board is, as it claims, focused on maintaining the Company’s financial flexibility, BLDR should keep the cash proceeds from a rights offering so they will be available to fulfill corporate obligations and/or preserve opportunities as they present themselves. Let us be crystal clear: The only reason to use cash proceeds to repay the Notes now, at par, would be to provide Warburg and JLL, who control the BLDR board, with immediate, windfall gains on their Note investments, at the expense of unaffiliated shareholders and BLDR’s liquidity and flexibility.

The Recapitalization remains an extraordinary example of fiduciary conflicts and self dealing by Warburg and JLL. To re-affirm key points made in our September 24, 2009 letter to the Special Committee:

Warburg and JLL have abused their positions, and breached their fiduciary duties, as directors of BLDR to enrich themselves at the expense of other shareholders.

Warburg and JLL usurped a key BLDR corporate opportunity by purchasing the Notes at a substantial discount to face value.

Warburg and JLL are being afforded, through the Recapitalization, an opportunity to either exchange the Notes at par (which represents at least 2x what Warburg and JLL paid for the Notes) or convert the Notes, at par, into BLDR common stock at a 50% discount to BLDR’s average price for the 30 days immediately prior to the date of their initial recapitalization proposal. It does not take an especially astute observer to see the conflicts of interest inherent in this blatant transfer of wealth from unaffiliated shareholders to Warburg and JLL.

2. Governance

We have already expressed our concern, in our September 24th letter, about the truly extraordinary conflicts of interest at the board level exposed during this process. Again, Warburg and JLL, who have instigated a process that has caused a steep decline in BLDR’s share price and a windfall for them at our expense, directly occupy 6 of 10 BLDR board seats.

We remain unconvinced that the independent BLDR directors are, in fact, independent. It has been noted both by us and in various BLDR shareholder lawsuits the interlocking nature of relationships between the “independent” directors and Warburg and JLL.

In order to restore shareholder confidence in the governance and fiduciary capabilities of BLDR’s board of directors, we believe that BLDR’s board of directors should be reconfigured to include at least two truly independent shareholder representatives.

In conclusion, Floyd Sherman, BLDR’s CEO and a board member, said it best in last week’s earnings call: “we are optimistic this transaction will be viewed favorably by our customers, suppliers, and employees”. It is no surprise that he failed to mention unaffiliated shareholders as beneficiaries of this transaction, as we obviously are not. We remain distressed with the terms of the Recapitalization and the ongoing governance of the Company. Finally, it is our firm conviction that minority shareholders will need to be extremely wary of investing in any public company in which Warburg and JLL have meaningful ownership positions.

Respectfully,

/s/

Stadium Capital Management, LLC