Stock Building Supply, the Raleigh company that sells building materials to the residential construction industry, has filed plans to raise as much as $175 million in an initial public offering of stock.
The company is part of a surge of homebuilders and suppliers seeking to raise money in the public markets as housing prices rebound and the industry’s overall fortunes improve.
Stock, founded in 1922 as Carolina Builders, sells windows, doors, roofing and other housing materials. A successful IPO would represent a remarkable turnaround for the company, which filed for bankruptcy in 2009 after the housing bubble burst and demand dried up for its materials.
During the housing and credit bubbles, Wolseley, Stock’s former British parent, used cheap credit to acquire dozens of companies in a failed attempt to diversify beyond Stock’s specialty of residential construction.
The company lost $246 million in 2008 before it was rescued by The Gores Group, a Los Angeles-based private equity firm that invested $75 million in Stock and is now its sole owner. After a trip into bankruptcy that lasted 57 days, Stock emerged much smaller and more narrowly focused, having exited several dozen markets and shed thousands of jobs.
Today, Stock operates in 20 metropolitan areas and 13 states that accounted for 48 percent of U.S. single-family permits last year. The company’s four largest markets are Texas, North Carolina, California and Utah. Stock had 2,460 employees as of the end of last year.
The company’s Securities and Exchange filing, made Friday, doesn’t disclose how big an ownership stake Stock intends to sell. Even after it goes public, The Gores Group would continue to own a majority of the company’s stock, which would make it a “controlled company.” That would exempt Stock from certain corporate governance requirements designed to protect shareholders, such as ensuring that a majority of the company’s board of directors are so-called independent directors.
Stock plans to use $60 million of the proceeds from the IPO to pay off a revolving credit line, according to its filing. An additional $9 million would be paid to The Gores Group to terminate a management services agreement. Stock had about $100 million in debt as of the end of March.
The company posted net losses the last two years – $42.1 million in 2011 and $14.2 million last year. But Stock’s sales have been rising, increasing 24 percent to $942 million last year.
Stock is the third Triangle company to file plans to go public in recent weeks. PRA Holdings, a Raleigh pharmaceutical services company, and Heat Biologics, a small Chapel Hill startup developing cancer treatments, also have filed.
Already this year five Triangle companies have completed IPOs.
Quintiles, another pharmaceutical services company based in Durham, raised nearly $950 million in an IPO last month. Medical diagnostics company LipoScience, drug development company Chimerix, e-commerce company ChannelAdvisor and Ply Gem Holdings also have gone public.
Like Stock, Cary-based Ply Gem, which makes vinyl siding and other home exterior products, has seen its business rebound as the housing market has recovered. Ply Gem filed for an IPO in 2010 but didn’t follow through because the weak housing market made investors unreceptive. Last month, the company raised about $306 million in its IPO. The stock, which started trading at $21, closed Friday at $22.35.
Stock has hired a blue-chip team of investment banks to manage its offering, led by Goldman, Sachs, Barclays and Citigroup.