8-K

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):  January 12, 2007

Headwaters Incorporated

(Exact name of registrant as specified in its charter)

Delaware	1-32459	87-0547337
(State or other jurisdiction)	(Commission	(I.R.S. Employer of incorporation
	File Number)	Identification Number)
10653 South River Front Parkway, Suite 300 South Jordan, UT		84095
(Address of principal executive offices)		(Zip Code)
Registrant’s telephone number, including area code:  (801) 984-9400
Not Applicable
(Former name or former address, if changed since last report)

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:

oWritten communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

oSoliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

oPre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

oPre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Certain statements contained in this Current Report on Form 8-K are forward-looking statements within the meaning of federal securities laws and Headwaters intends that such forward-looking statements be subject to the safe-harbor created thereby.  Forward-looking statements include Headwaters’ expectations as to the managing and marketing of coal combustion products, the production and marketing of building materials and products, the licensing of technology and chemical sales to alternative fuel facilities, the receipt of product sales, license fees and royalty revenues which are subject to tax credit phase-out risks, the development, commercialization, and financing of new technologies and other strategic business opportunities and acquisitions, and other information about Headwaters. Such statements that are not purely historical by nature, including those statements regarding Headwaters’ future business plans, the operation of facilities, the availability of tax credits in an environment of high oil prices and potential tax credit phase out, the availability of feedstocks, and the marketability of the coal combustion products, building products, and synthetic fuel, are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 regarding future events and our future results that are based on current expectations, estimates, forecasts, and projections about the industries in which we operate and the beliefs and assumptions of our management. Actual results may vary materially from such expectations. Words such as “expects,” “anticipates,” “targets,” “goals,” “projects,” “believes,” “seeks,” “estimates,” or variations of such words and similar expressions, are intended to identify such forward-looking statements.

Any statements that refer to projections of our future financial performance, our anticipated growth and trends in our businesses, and other characterizations of future events or circumstances, are forward-looking.

In addition to matters affecting the coal combustion products, alternative fuel, and building products industries or the economy generally, factors which could cause actual results to differ from expectations stated in forward-looking statements include, among others, the risk factors described in Item 7 in Headwaters’ Annual Report on Form 10-K for the fiscal year ended September 30, 2006, Quarterly Reports on Form 10-Q, and other periodic filings and prospectuses. Although Headwaters believes that its expectations are based on reasonable assumptions within the bounds of its knowledge of its business and operations, there can be no assurance that our results of operations will not be adversely affected by such factors. Unless legally required, we undertake no obligation to revise or update any forward-looking statements for any reason.

Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this report.

Item 1.01:  Entry into a Material Definitive Agreement.

On January 12, 2007, Headwaters received the required consents from its senior secured lenders to amend its senior secured credit agreement to provide Headwaters with additional flexibility with respect to certain restricted payments, including a $15 million basket for such payments, and for non-speculative hedging transactions. The form of amendment is attached hereto as Exhibit 10.93.5.

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Item 7.01:  Regulation FD Disclosure.

In the offering memorandum for the private offering of convertible subordinated notes referred to in Item 8.01 below, Headwaters disclosed summary financial information for the quarter ended December 31, 2006. The summary financial information for the quarter ended December 31, 2006 included within the offering memorandum consisted of the following statements:

“Based on our preliminary review of the quarter ended December 31, 2006, in the first quarter of our fiscal 2007, on an unaudited basis, we had total revenues of approximately $275.0 million, net income of approximately $17.0 million and fully-diluted earnings per share of approximately $0.37.  We continue to see the effects of a soft residential construction market on revenue and margins in our construction materials segment, while our CCP and alternative energy segments exceeded our performance expectations for the quarter ended December 31, 2006.”

Headwaters stated in the offering memorandum that it is currently evaluating the benefit of further amending its existing senior secured credit facility or pursuing other alternatives in order to provide additional financial flexibility and liquidity, but that it is under no obligation to amend or refinance its existing facility prior to termination in 2011. Headwaters also stated it is currently in full compliance with all covenants under its existing senior secured credit facility.

Headwaters also stated in the offering memorandum that it intends to commence an exchange offer for its $172,500,000 of aggregate principal amount of existing 2 7/8% convertible senior subordinated notes due 2016 in order to address certain adverse accounting consequences relating to these notes. However, Headwaters is under no obligation to make an exchange offer and it cannot determine whether, if made, such an exchange offer would be successful.

Headwaters is filing this information with this Current Report on Form 8-K so that the information contained therein will be disclosed pursuant to Regulation FD.

The information in Item 7.01 of this Current Report attached hereto, is being furnished and shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that Section. The information in Item 7.01 of this Current Report shall not be incorporated by reference into any registration statement or other current document filed pursuant to the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such a filing.

Item 8.01:  Other Events.

In a press release dated January 16, 2007, Headwaters Incorporated announced that it intends to offer convertible senior subordinated notes in a private offering, subject to market conditions and other factors. A copy of the press release is attached hereto as Exhibit 99.1, is incorporated by reference, and is hereby filed.

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Item 9.01:  Financial Statements and Exhibits.

(d)           Exhibits.

10.93.5:         Form of Amendment No. 7 to the Credit Agreement among Headwaters and various lenders dated as of January 12, 2007.

99.1               Press release announcing commencement of a private offering of $125 million of convertible senior subordinated notes due 2014.

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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 hereunto duly authorized.

Date:  January 16, 2007

HEADWATERS INCORPORATED
(Registrant)
By	/s/ Kirk A. Benson
	Kirk A. Benson
	Chief Executive Officer
	(Principal Executive Officer)

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EXHIBITS

10.93.5        Form of Amendment No. 7 to the Credit Agreement among Headwaters and various lenders dated as of January 12, 2007.

99.1             Press release announcing commencement of a private offering of $125 million of convertible senior subordinated notes due 2014.

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EX-10.93.5

EXHIBIT 10.93.5

Execution Copy

AMENDMENT NO. 7 TO THE CREDIT AGREEMENT

Dated as of January 12, 2007

AMENDMENT NO. 7 TO THE CREDIT AGREEMENT (this “Amendment No. 7”) among Headwaters Incorporated, a Delaware corporation (the “Borrower”), the Lenders (as defined in the Credit Agreement referred to below), Morgan Stanley & Co. Incorporated, as collateral agent (the “Collateral Agent”), and Morgan Stanley Senior Funding, Inc. (“Morgan Stanley”), as administrative agent (the “Administrative Agent”; together with the Collateral Agent, the “Agents”).

PRELIMINARY STATEMENTS:

(1)           The Borrower, certain financial institutions and other persons from time to time parties thereto (collectively, the “Lenders”), the Agents, JPMorgan Chase Bank, N.A. (as successor to JPMorgan Chase Bank), as syndication agent, and Morgan Stanley and J.P. Morgan Securities Inc., as joint lead arrangers and joint bookrunners, have entered into that certain Credit Agreement dated as of September 8, 2004 (as amended and modified pursuant to consents dated November 6, 2004 and December 16, 2004, Amendment No. 2 to the Credit Agreement dated March 14, 2005, Amendment No. 3 to the Credit Agreement dated May 19, 2005, Amendment No. 4 to the Credit Agreement dated October 26, 2005, Amendment No. 5 to the Credit Agreement dated June 27, 2006 and Amendment No. 6 to the Credit Agreement dated August 30, 2006 the “Credit Agreement”; capitalized terms used herein but not defined shall be used herein as defined in the Credit Agreement).

(2)           The Borrower, the Agents and the Required Lenders have agreed, subject to the terms and conditions hereinafter set forth, to amend the Credit Agreement in certain additional respects as set forth below.

NOW, THEREFORE, in consideration of the premises and for other good and valuable consideration (the receipt and sufficiency of which is hereby acknowledged), the parties hereto hereby agree as follows:

section 1.           Amendment of Credit Agreement.  The Credit Agreement is, effective as of the date hereof and subject to the satisfaction of the conditions precedent set forth in Section 2 below, hereby amended as follows: 

(a)           The definition of “Indebtedness” in Section 1.1 is amended by adding “)” at the end of, but before the final comma in, clause (iii) thereof.

(b)           The definition of “Restricted Payment” in Section 1.1 is amended by restating clause (ii) thereof to read as follows:

“(ii) any redemption, retirement, purchase or other acquisition for value, direct or indirect, of any Equity Interests of the Borrower or any of its Subsidiaries now or hereafter outstanding, other than (x) in exchange for, or out of the proceeds of, the substantially concurrent sale (other than to a Subsidiary of the Borrower) of other Equity

Interests of the Borrower (other than Disqualified Stock) and (y) premiums paid in connection with Rate Management Transactions,”

(c)           The definition of “Restricted Payment” in Section 1.1 is amended by restating clause (iii) thereof to read as follows:

“(iii) any redemption, purchase, retirement, defeasance, prepayment or other acquisition for value, direct or indirect, of any Indebtedness prior to the stated maturity thereof, other than any redemption, purchase, retirement, defeasance, prepayment or other acquisition of (x) the Obligations and (y) so long as no Default or Unmatured Default exists at the time thereof or would arise after giving effect thereto, any other Indebtedness (together with the related payment of any interest or any consent fee in respect thereof) in part or full exchange for, or with the proceeds of the issuance or incurrence of, any Subordinated Indebtedness permitted under Section 6.14.8 or the issuance of any Equity Interests of the Borrower (subject in each case to any mandatory prepayment of the Obligations required to be made in accordance with Section 2.2(c)), in each case within one hundred eighty (180) days of the issuance of such Subordinated Indebtedness or Equity Interests,”

(d)           Section 6.10 is amended by restating clause (iv) thereof to read as follows:

“(iv) so long as no Default or Unmatured Default exists at the time thereof or would arise after giving effect thereto, Restricted Payment in the aggregate amount of not more than fifteen million dollars ($15,000,000).”

(e)           Section 6.13 is amended by adding to the end thereof a Section 6.13.7 to read as follows:

“6.13.7 Investments consisting of Rate Management Transactions otherwise permitted hereunder.”

(f)            Section 6.17 is amended by amending and restating the last sentence thereof in its entirety to read as follows:

“Except to the extent set forth in the preceding sentence, the Borrower will not, nor will it permit any Subsidiary to, enter into or remain liable upon any Rate Management Transactions except for those entered into in connection with a bona fide hedging transaction and not for speculative purposes.”

section 2.           Conditions to Effectiveness.  This Amendment No. 7 and the amendments contained herein shall become effective as of the date hereof (the “Amendment No. 7 Effective Date”) when each of the conditions set forth in this Section 2 to this Amendment No. 7 shall have been fulfilled to the satisfaction of the Administrative Agent.

(a)           Execution of Counterparts.  The Administrative Agent shall have received counterparts of this Amendment No. 7, duly executed and delivered on behalf of the Borrower and the Required Lenders, or, as to any of the foregoing parties, advice reasonably satisfactory to the Administrative Agent that such party has executed a counterpart of this Amendment No. 7.

(b)           Guarantor Consent.  The Administrative Agent shall have received the Consent attached as Exhibit A hereto duly executed by each of the Guarantors.

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(c)           Payment of Fees and Expenses.  The Borrower shall have paid (i) an amendment fee of 5 basis points for the account of each Lender that executes and delivers this Amendment No. 7  at or before 5:00 P.M. (New York City time) on January 12, 2007 (calculated on the outstanding principal amounts owed to such Lender under its respective outstanding Loans and Commitments), subject to successful achievement of the Amendment No. 7 Effective Date, and (ii) all reasonable expenses (including the reasonable fees and expenses of Shearman & Sterling LLP) incurred in connection with the preparation, negotiation and execution of this Amendment No. 7 and other matters relating to the Credit Agreement from and after the last invoice to the extent invoiced.

(d)           No Default.  No Default or Unmatured Default shall have occurred and be continuing or would occur as a result of the transactions contemplated by this Amendment No. 7.

section 3.     Confirmation of Representations and Warranties.  Each of the Credit Parties hereby represents and warrants, on and as of the date hereof, that (a) the representations and warranties contained in the Credit Agreement are correct and true in all material respects on and as of the date hereof, before and after giving effect to this Amendment No. 7, as though made on and as of the date hereof, other than any such representations or warranties that, by their terms, refer to a specific date and (b) no Default or Unmatured Default has occurred and is continuing, or would occur as a result of the transactions contemplated by this Amendment No. 7.

section 4.     Reference to and Effect on the Loan Documents.  (a) On and after the Amendment No. 7 Effective Date, each reference in the Credit Agreement to “hereunder”, “hereof” or words of like import referring to the Credit Agreement, and each reference in the other transaction documents to the “Credit Agreement”, “thereunder”, “thereof” or words of like import referring to the Credit Agreement, shall mean and be a reference to the Credit Agreement as modified by this Amendment No. 7.

(b)           The Credit Agreement, the Pledge and Security Agreement, the Notes and each of the other Loan Documents, as specifically amended by this Amendment No. 7, are and shall continue to be in full force and effect and are hereby in all respects ratified and confirmed.  Without limiting the generality of the foregoing, the Collateral Documents and all of the Collateral described therein do and shall continue to secure the payment of all Obligations of the Credit Parties under the Loan Documents, in each case as amended by this Amendment No. 7.

(c)           The execution, delivery and effectiveness of this Amendment No. 7 shall not, except as expressly provided herein, operate as a waiver of any right, power or remedy of any Lender or any Agent under any of the Loan Documents, nor constitute a waiver of any provision of any of the Loan Documents.

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section 5.     Execution in Counterparts.  This Amendment No. 7 may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute but one and the same agreement.  Delivery of an executed counterpart of a signature page to this Amendment No. 7 by facsimile shall be effective as delivery of a manually executed original counterpart of this Amendment No. 7.

section 6.     Governing Law.  This Amendment No. 7 shall be governed by, and construed in accordance with, the laws of the State of New York, and shall be subject to the jurisdictional and service provisions of the Credit Agreement, as if this were a part of the Credit Agreement.

section 7.     Entire Agreement; Modification.  This Amendment No. 7 constitutes the entire agreement of the parties hereto with respect to the subject matter hereof, there being no other agreements or understandings, oral, written or otherwise, respecting such subject matter, any such agreement or understanding being superseded hereby, shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns, and may not be amended, extended or otherwise modified, except in a writing executed in whole or in counterparts by each party hereto.

[Signature PAGES follow]

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IN WITNESS WHEREOF, the parties hereto have caused this Amendment No. 7 to be executed by their respective officers thereunto duly authorized, as of the date first above written.

HEADWATERS INCORPORATED,
	as Borrower
By:
	Title:
MORGAN STANLEY SENIOR FUNDING, INC.,
	as Administrative Agent, Swing Line Lender and as a Lender
By:
	Title:
MORGAN STANLEY & CO. INCORPORATED,
	as Collateral Agent
By:
	Title:

Lenders:

By:
	Name:
	Title:

EXHIBIT A

CONSENT

Dated as of January 12, 2007

Reference is made to the Credit Agreement referred to in the foregoing Amendment No. 7 (capitalized terms used herein and not defined being used herein as defined in the Credit Agreement).  Each of the undersigned, in its capacity as a Guarantor under the Guaranty Agreement and as a Grantor under the Pledge and Security Agreement, hereby (i) consents to the execution, delivery and performance of Amendment No. 7 and agrees that each of the Guaranty Agreement and the Pledge and Security Agreement is, and shall continue to be, in full force and effect and is hereby in all respects ratified and confirmed on the Amendment No. 7 Effective Date, except that, on and after the Amendment No. 7 Effective Date, each reference to “the Credit Agreement”, “thereunder”, “thereof”, “therein” or words of like import referring to the Credit Agreement shall mean and be a reference to the Credit Agreement as amended and otherwise modified by Amendment No. 7 and (ii) confirms that the Collateral Documents to which each of the undersigned is a party and all of the Collateral described therein do, and shall continue to, secure the payment of all of the Secured Obligations.

ATLANTIC SHUTTER SYSTEMS, INC.;

BEST MASONRY & TOOL SUPPLY, LLC

CHIHUAHUA STONE LLC;

COVOL COAL COMPANY, LLC;

COVOL ENGINEERED FUELS, LC;

COVOL SERVICES CORPORATION;

DON’S BUILDING SUPPLY, LLC

ELDORADO G-ACQUISITION CO.;

ELDORADO SC-ACQUISITION CO.;

ELDORADO STONE ACQUISITION CO., LC;

ELDORADO STONE FUNDING CO., LLC;

ELDORADO STONE LLC;

ELDORADO STONE OPERATIONS LLC;

ENVIRONMENTAL TECHNOLOGIES GROUP, LLC;

GLOBAL CLIMATE RESERVE CORPORATION;

HCM FLEXCRETE, LLC;

HCM STONE, LLC;

HCM UTAH, INC.;

HEADWATERS CONSTRUCTION MATERIALS, INC.;

HEADWATERS CONSTRUCTION MATERIALS, LLC;

HEADWATERS ENERGY SERVICES CORP.;

HEADWATERS ETHANOL OPERATORS, LLC;

HEADWATERS HEAVY OIL, LLC;

HEADWATERS CTL, LLC

HEADWATERS RESOURCES, INC.;

HEADWATERS SYNFUEL INVESTMENTS, LLC;

HEADWATERS TECHNOLOGY INNOVATION, LLC;

HEADWATERS SERVICES CORPORATION;

L-B STONE LLC;

METAMORA PRODUCTS CORPORATION;

METAMORA PRODUCTS CORPORATION OF ELKLAND;

MTP, INC.;

TAPCO INTERNATIONAL CORPORATION;

VFL TECHNOLOGY CORPORATION;

WAMCO CORPORATION

each as a Guarantor
By:
	Name:  Scott K. Sorensen
	Title: Chief Financial Officer

EX-99.1

EXHIBIT 99.1

HEADWATERS INCORPORATED ANNOUNCES PROPOSED OFFERING
OF $125 MILLION OF CONVERTIBLE SENIOR SUBORDINATED NOTES

SOUTH JORDAN, UTAH,  JANUARY 16, 2007 — HEADWATERS  INCORPORATED (NYSE: HW) announced today it intends to offer, subject to market and other conditions, $125 million of convertible senior subordinated notes due 2014 (the “Notes”) in a private placement to qualified institutional buyers pursuant to exemptions from the registration requirements of the Securities Act of 1933.  The Notes will mature in 2014 and will bear interest at a rate to be determined.  The Notes are expected to pay interest semiannually and will be convertible into cash and, if applicable, shares of Headwaters’ common stock based on a conversion rate to be determined.  The Notes may be repurchased, at the option of the holder, prior to maturity upon the occurrence of certain fundamental changes involving Headwaters’ common stock.  Headwaters expects to grant an over-allotment option to the initial purchasers for an additional $25 million aggregate principal amount of the Notes.

Concurrently with the pricing of the Notes, Headwaters intends to enter into convertible note hedge and warrant transactions in respect of its common stock with an affiliate of one of the initial purchasers.  These transactions are intended to reduce the dilution to Headwaters’ common stock from potential future conversion of the Notes.

In connection with the convertible note hedge and warrant transactions, it is expected that our counterparty to those transactions or its affiliate will enter into various derivative transactions with respect to Headwaters’ common stock concurrently with or shortly after the pricing of the Notes. In addition, such counterparty or its affiliate may enter into, or unwind, various derivatives transactions with respect to Headwaters’ common stock and/or to purchase or sell shares of Headwaters’ common stock in secondary market transactions following the pricing of the notes (and is likely to do so during any observation period related to an exchange of the notes). These activities could have the effect of increasing or preventing a decline in the price of Headwaters’ common stock concurrently with or following the pricing of the Notes.

Headwaters intends to use all of the net proceeds from the offering to repay a portion of its senior secured credit facility.

This press release does not constitute an offer to sell or the solicitation of an offer to buy securities and shall not constitute an offer, solicitation or sale in any jurisdiction in which such offer, solicitation or sale is unlawful.  The Notes and any common stock issuable upon conversion of the Notes have not been registered under the Securities Act of 1933 or applicable state securities laws and, unless so registered, may not be offered or sold in the United States except pursuant to an exemption from the registration requirements of the Securities Act and applicable state securities laws.

Except for the historical information contained herein, the matters set forth in this press release, such as statements as to the expected use of net proceeds, are forward-looking statements within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially, including market and other conditions that may affect Headwaters’ ability to complete the proposed offering and other risks detailed from time to time in Headwaters’ SEC reports.  Headwaters disclaims any intent or obligation to update these forward-looking statements.