The BuildDirect saga looks to finally have come to an end as they emerge from the ashes to sell online once again.
The home improvement e-commerce site has exited creditor protection with a successful round of financial restructuring. The Vancouver-based BuildDirect raised $28 million USD of new funds and converted $15 million of interim financing provided during the Companies’ Creditors Arrangement Act (CCAA) proceedings for a total combined raise of $43 million, led by Mohr Davidow Ventures.
Other new and existing ventures that participated in the round include Fidelity Investments Canada ULC, Pelecanus Investments Ltd., Lyra Growth Partners Inc., and Beedie Capital.
“In addition to reducing our cost structure and strengthening our balance sheet to support our long-term business objectives, we have a renewed focus on professionals which include contractors, builders and interior designers,” said Dan Park, CEO of BuildDirect. “Today marks a defining moment for BuildDirect and I am confident customers and sellers alike will soon recognize the signs of a newly energized and well capitalized business poised for success.”
It has been a trepidatious past half-year for BuildDirect. The company’s co-founder and former CEO Jeff Booth stepped down from his role in late October in 2017 right before the company filed for protection, citing debt he brought into the company that undervalued the overall business.
“Today, that decision has created an unforeseen roadblock in how I lead BuildDirect from this point forward, specifically how to maintain our vision and how to protect the investment of staff, investors and partners who have believed in our company for the better part of 18 years,” wrote Booth in October.
From there, BuildDirect managed to win court protection from creditors as they scrambled to find new investors. The money came in January of 2018 in the form of Mohr Davidow Ventures, which has now been finalized and announced publicly.
Secured creditors agreed to convert $58 million USD of debt to equity, resulting in only $4 million of the debt remaining at emergence from creditor protection. BuildDirect can use this new restructuring deal to further expand and secure new funders.
“We are very bullish on the shift towards professional contractors,” said Katherine Barr, general partner at Mohr Davidow Ventures. “BuildDirect is pursuing a very large market opportunity and we believe that the company’s assets, capabilities, and executive leadership uniquely position the Company to be extremely successful moving forward.”
Over 99 per cent of suppliers reportedly stayed on with BuildDirect through the restructuring process as well.