Archives for August 16, 2012

GE Antares Backs Dividend Recap for CHS

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GE Antares served as administrative agent on a $85 million senior credit facility for Kele, a supplier of commercial HVAC and building automation interface products and a portfolio company of CHS Capital.  The financing supported a dividend recapitalization.

“GE Capital committed to and placed the facility with its strategic investor relationships, limiting the need for syndication and allowing us to move quickly to closing,” said David Hawkins, partner at CHS Capital. “In addition, our relationship with GE Antares and their deep understanding of our business helped us close this transaction efficiently and successfully.”

Kele is a catalog-based supplier of peripheral control products and services to the building automation systems industry.  Products include transmitters, sensors, switches, gauges, transformers, actuators, relays and transducers. Kele also offers peripheral control products for the lighting industry and security and access control products. The company is based in Memphis, TN (www.kele.com).

“The growth of Kele requires a lender who understands our business and our goals. GE Capital has this understanding and we look forward to working with them as we continue to grow and expand our market reach,” said Tim Vargo, president and CEO of Kele.

GE Antares is a unit of GE Capital with offices in Atlanta, Chicago, Los Angeles, New York, and San Francisco. Specializing in the middle market, GE Antares is a “one-stop” source for GE’s lending and other services to middle market private equity sponsors (www.geantares.com).

“We are pleased to provide this financing to support the growth of Kele with CHS Capital,” said Brian Polomsky, senior vice president at GE Antares Capital. “Working with our strategic investor relationships we were able to provide the entire facility. We look forward to leveraging these relationships to continue delivering financing solutions for CHS Capital, Kele and other middle-market leaders.”

CHS Capital (formerly Code Hennessy & Simmons) specializes in private equity investments and recapitalizations of middle market companies in partnership with management. CHS targets companies with enterprise values between $75 million and $500 million. Industries of interest include business & consumer services; distribution; industrial products; infrastructure; and energy.  The firm is located in Chicago, IL (www.chsonline.com).

PEPD 8-16-12

Stuart Schoenmann Joins Norwest Equity Partners

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Norwest Equity Partners (“NEP”) has added Stuart Schoenmann as a new operating partner.  Mr. Schoenmann, a high-tech manufacturing and applied technology industry veteran, will help NEP evaluate and execute new investment opportunities. He will also play an active role in strategic planning, business growth and corporate governance for NEP portfolio companies.

“On behalf of the NEP partnership, I am thrilled to have Stuart join our team. Operating partners complement our overall investment strategy and are valuable resources to our investment staff and portfolio companies. Stuart’s deep industry expertise and CEO leadership experience will help our firm attract great investment opportunities, especially with businesses that have heavy technology and manufacturing capabilities,” said Tim DeVries, NEP Managing General Partner.

Mr. Schoenmann brings more than 25 years of high-tech manufacturing, applied technology, and diversified industrial expertise and 12 years of CEO and COO leadership experience to NEP. Prior to joining NEP, he served as CEO of CVI Melles Griot, a designer and manufacturer of precision photonics products, including components, assemblies and systems, in which NEP made an investment in 2003.  NEP partnered with Mr. Schoenmann as CEO and John Hale, another NEP operating partner, to build CVI into a leader within the photonics industry by expanding its product offerings and completing four add-on acquisitions.  NEP sold CVI to IDEX Corporation in June 2011 for $400 million.  Prior to his time at CVI, Mr. Schoenmann held leadership positions at Raytek Corporation, PerkinElmer, Corning, and Rockwell International.

“I’ve been fortunate to work closely with the NEP team, and I continue to be impressed by the firm’s commitment to executing its investment strategy. The team works hand-in-hand with portfolio companies, providing value-add investment expertise and extensive resources. I’m excited to come on board to help source investment opportunities with fast-growing applied technology and diversified industrial companies,” said Mr. Schoenmann.

Norwest Equity Partners is a middle-market private equity firm.  The firm makes equity investments of $30 million to $150 million in companies operating in the agriculture, applied technology, business services, consumer products and services, distribution, diversified industrials, and healthcare sectors.  The firm manages $5 billion of capital through a series of equity and mezzanine limited partnerships and is currently investing NEP IX with $1.2 billion in capital. Norwest Equity Partners is headquartered in Minneapolis, MN (www.nep.com).

PEPD 8-16-12

CAI Private Equity Adds Allan Weinstein to Team

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CAI Private Equity has appointed Allan Weinstein as a new Managing Partner. He will lead the firm’s United States investment effort, which is focused on energy and utility services, business and financial services, specialty/niche manufacturing, aerospace and healthcare. He will be based in CAI’s New York office.

“Allan is a valuable addition to our partnership. He possesses a great deal of experience across a variety of industries and has led a number of successful investments,” said Les Daniels, Managing Partner and Co- Founder of CAI. “I’m excited to work with him as his energy and capability will help grow our United States investment efforts enormously.”

With nearly 18 years of experience in private equity investing, Mr. Weinstein most recently served as Managing Director at Lincolnshire Management, a middle market private equity firm. He led investment transactions with favorable returns and held board positions in portfolio companies: Allison Marine Holdings, Phoenix Brands, Wabash National Corporation, Bankruptcy Management Solutions; Prince Sports; and Riddell Sports. During this time, Mr. Weinstein also served as interim, full-time CFO during the turnaround of Credentials Services International, a Lincolnshire portfolio company. Prior to Lincolnshire, he was a Senior Credit Analyst for Fleet Bank.

“CAI has an impressive track record in the middle-market particularly in the utility-services, energy, specialty manufacturing, health care, aerospace, and business and financial services segments,” said Mr. Weinstein. “I expect the combination of my experience in the middle-market, CAI’s strong foundation, experienced professionals and our focus on building the business, particularly by investing in middle-market companies with EBITDA in excess of $5 million, will yield impressive results.”

CAI is a private equity firm specializing in buyouts, restructurings, acquisitions, recapitalizations and other corporate growth initiatives. CAI has $650 million under management, is currently investing Fund IV, and is targeting companies that generate in excess of $5 million in annual EBITDA in the utility and energy services, healthcare, aerospace & defense, specialty manufacturing, and business and financial services sectors. The firm was founded in 1989 and has offices in New York, Toronto, Montreal and Vancouver (www.caifunds.com).

“I’m particularly pleased to welcome Allan into our partnership and look forward to collaborating with him to grow the firm for the next generation,” said Tracey McVicar, Managing Partner.

Swander Pace Capital Acquires Physicians Formula

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Physicians Formula Holdings, a cosmetics and skin care company, and Swander Pace Capital have entered into an agreement under which Swander Pace will acquire Physicians Formula for $65 million. “We are pleased that Swander Pace has agreed to purchase our company. The firm has a record of success in acquiring and operating companies in the consumer space, and we believe they will add value to our business as we continue to successfully execute our growth initiative,” said Ingrid Jackel, Physicians Formula Chairwoman and CEO.

Physicians Formula is a cosmetics and skin care company operating in the mass market prestige, or “masstige,” market. Under its Physicians Formula brand name, created in 1937, the company develops, markets and distributes premium-priced products for the mass market channel. Physicians Formula products are sold in over 25,000 stores including those operated by Wal-Mart, Target, CVS and Rite Aid. The company was founded in 1937 and is based in Azusa, CA (www.physiciansformula.com).

Under the terms of the agreement, Swander Pace will acquire all outstanding shares of the common stock of Physicians Formula (NASDAQ:FACE) for $4.25 per share in cash, or approximately $65 million. The per share price represents a premium of approximately 15% over Physicians Formula’s closing stock price on August 14, 2012. The Physicians Formula’s Board of Directors has approved the agreement.

Swander Pace Capital invests in middle-market consumer products companies including branded and non-branded, manufacturers, marketers, and distributors that sell through a range of retail and institutional channels. The firm generally targets companies up to $300 million in revenues. Swander Pace manages over $1 billion in equity capital and has offices in San Francisco, CA and Bedminster, NJ (www.spcap.com).

“The acquisition of Physicians Formula reinforces Swander Pace’s investment focus on lower middle-market consumer products industry companies,” said Mo Stout, a Swander Pace Managing Director. “Physicians Formula is a pioneer in the cosmetics industry, and we are committed to working with its management team on this next stage of growth and innovation for the company.”

Blackstone Advisory Partners delivered a fairness opinion in connection with this transaction. Sheppard Mullin Richter & Hampton is serving as legal advisor to Physicians Formula and Kirkland & Ellis provided legal counsel to Swander Pace in connection with the transaction.

PEPD 8-16-12

Saw Mill Exits Pexco

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Saw Mill Capital has completed the sale of its portfolio company Pexco, a manufacturer of extruded plastic products, to Odyssey Investment Partners. The entire Pexco management team, including Chief Executive Officer Neil Shillingford, Chief Financial Officer Dennis Fink, and Chief Operating Officer Sam Patel, have invested in the transaction alongside Odyssey and will continue to lead the company.

“Neil Shillingford and his team did a terrific job expanding the Pexco organization and their capabilities, deploying new processes, and expanding into new products, markets and geographies, which resulted in improving the company’s opportunities for continued growth on a global scale,” said Tim Nelson, Principal of Saw Mill.  “Under the ownership of Saw Mill, Pexco increased revenues and EBITDA over 40% and 75%, respectively.”

Pexco is a leading multi-site custom extruder of thermoplastic profile, tube and sheet. The company serves the life sciences, industrial and commercial end markets. Pexco operates 170 extruders, 50 dedicated co-extruders and six sheet lines across approximately 920,000 square feet of production space across 10 facilities in the U.S. and Mexico. Additionally, Pexco provides a variety of complementary, value-added services such as design, prototyping, die building, sub assembly and supply chain management.  The company is based in Alpharetta, GA (www.pexco.com).

“The Saw Mill team was an important corporate development partner to us, introducing processes and approaches that helped us develop and execute on our strategies, and providing access to the resources we required to implement our growth strategy,” said Neil Shillingford, CEO of Pexco.  “I especially appreciated their systematic and practical approaches to strategy deployment, lean business practices, sales force excellence, and acquisitions.  Their counsel in these areas accelerated the expansion of our management team and internal processes in ways that fundamentally strengthened our business and improved our future prospects.”

Saw Mill Capital invests in manufacturing and service companies with enterprise values of $25 to $200 million. Saw Mill makes platform investments in companies with at $40 million to $150 million of revenues and at least $5 million of pro forma EBITDA. It will consider smaller transactions as add-ons for portfolio companies. The firm is located in Briarcliff Manor, NY (www.sawmillcapital.com).

Odyssey Investment Partners is a middle-market private equity fund with more than $2 billion under management. Odyssey makes controlled investments primarily in established middle-market companies in a variety of industries, including industrial manufacturing, business, financial and healthcare services, aerospace products, and localized and route-based service businesses. The firm is headquartered in New York, NY (www.odysseyinvestment.com).

“Pexco is an extremely well positioned company within the custom segment of the extrusion sector and operates in attractive end markets.  We believe Pexco is an excellent platform for expansion through organic growth and strategic add-on acquisitions. We are excited to partner with Pexco’s outstanding management team, and we expect to build Pexco into a global leader in the niche extrusion industry,” said Craig Staub, Managing Principal of Odyssey.

William Blair & Company acted as Pexco’s advisor in this transaction.

PEPD 8-16-12