Nov. 28 (Bloomberg) -- Masonite International, the door and fiberboard maker taken over by Kohlberg, Kravis, Roberts & Co. three years ago, extended a forbearance agreement with lenders until Dec. 19, according to a regulatory filing.

In exchange, Masonite’s lenders want a draft business plan by Dec. 19 and to review that plan by Dec. 22, the Mississauga, Ontario-based company said in a filing today with the U.S. Securities and Exchange Commission. The company agreed to pay 2 percentage points more in interest on the loans in the form of more debt, and the forbearance can be extended until Jan. 15 if Masonite meets the terms set by lenders, according to the filing.

Masonite, which KKR bought for $1.9 billion, is negotiating with a lender group led by Scotia Capital after breaching loan covenants in the second quarter amid the worst housing and financial crisis since the Great Depression. KKR partner Paul Raether said Nov. 3 the New York-based buyout firm marked down the value of its equity investment in Masonite to zero. In 2005, Standard & Poor’s estimated the stake was worth $650 million.

“The financial covenants relate to EBITDA metrics and reflect the challenging conditions in the U.S. housing industry,” the company said today, referring to earnings before interest, taxes, depreciation, and amortization.

In the second quarter, Masonite broke covenants prohibiting the company from incurring debt seven times greater than EBITDA, according to a filing. The ratio surged to 8.25 times as of June 30, after the earnings figure declined 44 percent to $56 million, the filing said. In September, Masonite arranged a bank-loan forbearance agreement that expired Nov. 13.

Bondholders

Lazard Ltd., Loughlin Meghji & Co. and Wachtell Lipton Rosen & Katz are advising Masonite’s lenders.

On Nov. 17 bondholders holding 92 percent of the company’s $412 million of notes due in 2015 agreed to not demand repayment of the securities through Dec. 31, the statement said. The notes are quoted at 14.75 cents on the dollar, according to Trace data, the bond-price reporting system of the Financial Industry Regulatory Authority. Holders of 53 percent of the $358 million notes issued by Masonite, due in 2015, also agreed to hold off on demanding immediate payment.

To contact the reporter on this story: Pierre Paulden in New York at ppaulden@bloomberg.net;

Last Updated: November 28, 2008 13:08 EST