A reorganized and officially relocated BMC Select is in a good position to capitalize when the homebuilding market starts coming back from its recent dive, CEO Paul Street said in an interview at the company’s new Boise headquarters Jan. 13.
Predecessor Building Materials Holding Co. emerged from a pre-negotiated Chapter 11 bankruptcy reorganization Jan. 4 and moved its headquarters from San Francisco to Boise under the new BMC Select banner. BMC Select employs about 140 at its 27,000-square-foot headquarters and administrative service center at 720 Park Blvd. in downtown Boise. More than 40 work at a distribution facility on Franklin Road in west Boise, and about 100 work for the company in eastern Idaho.
Moving the headquarters to Boise enabled the company to retain access to high-quality employees while reducing wage and occupancy costs, Street said. Tasks and responsibilities of 12 positions were transferred from San Francisco to Boise.
“We expect as the company grows, we will expand the opportunities here” for employment, he said.
The company and predecessors have occupied the Boise administrative service center since October 1997. The CEO, chief financial officer and other officers moved to San Francisco that year as part of a headquarters move that coincided with Boise-based building materials supplier BMC West becoming a subsidiary of then-new Building Materials Holding Co. The holding company in the late 1990s began acquiring residential construction service operations – such as framing, concrete and plumbing providers – under its Select Build unit.
The bankruptcy came in the midst of an approximately 70 percent drop in housing starts in 2008-09 from the mid-2000s peak, Street said. The company’s total employment stands at about 3,700 compared to about 23,000, including construction workers, at the peak. Sales are now below $1 billion, compared to about $3 billion at the peak.
“The company (Building Materials Holding) formed to complete acquisitions of those services, and demand went away,” he said.
The Building Materials Holding Co. bankruptcy proceeding lasted six months. Street said the company restructured its balance sheet and emerged from the bankruptcy with a new loan facility and reduced indebtedness. BMC Select now has a $50 million revolving credit line with Wells Fargo Foothill, a $40 million term loan, and a $135 million subordinated loan to the prior lender group. The new financing terms are “substantially better than our prior terms,” he said.
BMC Select is owned by the lender group that was involved with Building Materials Holding prior to the petition for bankruptcy reorganization. The company has about 55 shareholders, the largest of which is Wells Fargo Bank, Street said. An exchange of debt for stock reduced the former Building Materials Holding Co.’s indebtedness by 50 percent, he said.
Now that the company has emerged from bankruptcy, it has a stable balance sheet and much more liquidity, he said. The company is focused on its traditional Western U.S. footprint – it exited Florida, Virginia and Illinois – and has good relationships with its vendors, he said. Longstanding customers and employees were key in the company emerging from the bankruptcy successfully and fairly quickly, he said.
The former Building Materials Holding Co., now BMC Select, went through considerable restructuring and consolidation.
“We are now well positioned, with a streamlined cost structure, to take advantage of market opportunities,” Street said. He added: “We believe we are in position to be very successful as the market improves.”
Idaho Lt. Gov. Brad Little, at a press event at BMC Select’s headquarters, said recent moves by BMC Select and RedBuilt – which has ties to former Boise corporation Trus Joist – reflect Idaho’s high quality of life and good business atmosphere as well as the availability of employees and commercial real estate. The residential real estate market probably isn’t through winding down, but high-quality companies and their employees find ways to change, survive and thrive, he said. State and local dignitaries, suppliers and professional service providers to BMC Select attended the event.
This year won’t be easy given trends such as “the overhang of foreclosures,” but the reorganized company is in a good competitive position to take advantage of opportunities when they arise, Street told the group. BMC Select will add employees and service providers as demand warrants, and will hold company meetings in Boise, he said.
Legacy company BMC West formed in 1987 by acquiring 20 retail stores and some other assets from Boise Cascade Corp., and went public in 1991.