October 4, 2013
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Archives for October 4, 2013

KPS Capital Acquires Furniture Brands International

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furniture brands nfKPS Capital Partners has entered into an asset purchase agreement with Furniture Brands International under which KPS will acquire substantially all of the assets of the company, including the company’s Lane business, for $280 million. 

The acquisition agreement was designated by the United States Bankruptcy Court for the District of Delaware as the lead bid in a Court-supervised sale process under Section 363 of the Bankruptcy Code.  Furniture Brands filed voluntary petitions under Chapter 11 of the Bankruptcy Code on September 9, 2013.

KPS, through an affiliate, has also agreed to provide Furniture Brands with a $190 million Debtor-in-Possession financing facility to support its operations.

“We are pleased to reach this agreement to acquire substantially all of the assets of Furniture Brands.  We believe there is exceptional value in the Furniture Brands businesses that can be realized through considerable operational improvements and focused investments behind all of the company’s brands,” said Raquel Vargas Palmer, a Partner of KPS. 

Furniture Brands International (OTC: FBNIQ) is a home furnishings company with brands that include Broyhill, Lane, Thomasville, Drexel Heritage, Henredon, Hickory Chair, Pearson, Laneventure, and Maitland-Smith.  The company’s products are sold through a range of channels, including the company’s own Thomasville retail stores and through interior designers, multi-line/independent retailers and mass merchant stores. The company was founded in 1911 and is based in Clayton, MO (www.furniturebrands.com).

“KPS provides us the financial flexibility and operational expertise to emerge from this process a strong standalone business positioned for future growth.  We look forward to working with the KPS team to return our business to leadership positions in our targeted markets for the benefit of our employees, customers, suppliers and business partners,” said Ralph Scozzafava, Chairman of the Board and CEO of Furniture Brands.

KPS Capital Partners is the manager of the KPS Special Situations Funds, a group of private equity funds with over $6 billion of committed capital focused on investing in restructurings, turnarounds and other special situations. The KPS investment strategy targets manufacturing and industrial companies with strong market positions that are going through a period of transition or experiencing operating or financial difficulties. The firm’s portfolio companies have aggregate annual revenues of approximately $7.6 billion, operate 88 manufacturing plants in 25 countries, and employ over 31,000 associates worldwide. KPS Capital Partners is headquartered in New York (www.kpsfund.com).
Proskauer Rose is acting as legal counsel to KPS on this transaction.

© 2013 PEPD • Private Equity’s Leading News Magazine • 10-4-13

BRS and Palladin Acquire InMotion

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Bruckmann, Rosser, Sherrill & Co. and Palladin Consumer Retail Partners have formed InMotion Entertainment Group and acquired all of the InMotion Entertainment, Soundbalance, and Headphone Hub branded entertainment and electronics airport retail businesses from Project Horizon, a subsidiary of Gate Petroleum Company. 

“We have been very impressed by CEO Jeremy Smith and his management team, who have successfully increased the company’s market share and strengthened its position in airport retail.  They have grown successfully by providing travelers with a broad selection of products and a great shopping experience,” said Tom Baldwin, a Managing Director of Bruckmann, Rosser, Sherrill & Co.

InMotion Entertainment Group is an airport-based retailer of headphones, mobile device accessories and other consumer electronics.  The company operates nearly 80 locations in airports across the United States under the InMotion Entertainment, Soundbalance, and Headphone Hub banners.  Products sold include electronics, including tablets, digital cameras, portable power, and noise-canceling headphones. InMotion Entertainment has exclusive airport partnerships with Beats by Dr. Dre, Bang & Olufsen, and Samsung. The company is based in Jacksonville (www.inmotionstores.com).

“Consumers are increasingly shopping at retail stores in airports and consumer electronics is one of the fastest-growing segments within airport retail,” said Mark Schwartz, CEO of Palladin.  “As one of the best-in-class operators, and one that caters to a very attractive demographic base, we believe InMotion has a tremendous opportunity to grow both domestically and abroad.”

Bruckmann, Rosser, Sherrill & Co. and Palladin have partnered in the past, most recently for Things Remembered, a retailer of personalized gifts with 600 stores worldwide, which they owned together from 2006 to 2012.

Bruckmann, Rosser, Sherrill & Co. (BRS) invests in middle market consumer goods and services businesses and has $1.4 billion of committed capital under management.  Since 1996, BRS has purchased over 40 portfolio companies for aggregate consideration of over $6.4 billion. In addition, BRS portfolio companies have completed approximately $1.9 billion of add-on acquisitions. Prior to forming the firm, the founders of BRS were in the financial acquisition business at Citicorp Venture Capital where they closed 25 transactions with aggregate transaction values totaling $5.8 billion.  The firm is based in New York (www.brs.com).

Palladin Consumer Retail Partners, previously known as Palladin Capital Group, invests exclusively in retail and consumer products companies in North America and Europe that have revenues ranging from $50 million to $500 million.  Palladin invests from $10 million to $50 million of equity capital in each transaction. Palladin is investing out of its current fund which was closed in April 2012.  The firm was founded in 1998 and is based in Boston (www.pcrp.com).

Fifth Street Finance provided debt financing and co-invested in the equity in the transaction.  Wells Fargo Securities acted as the exclusive financial advisor and Holland & Knight acted as legal advisor to Project Horizon.

© 2013 PEPD • Private Equity’s Leading News Magazine • 10-4-13

Catterton Exits Mid-Atlantic Convenience Stores

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macs nfCatterton Partners has completed the sale of Mid-Atlantic Convenience Stores (MACS) to an affiliate of Sunoco. Catterton invested in MACS in August 2010.

Mid-Atlantic Convenience Stores is a convenience store operator in Maryland and Virginia. With a network of approximately 300 company-owned and dealer locations, MACS is one of the largest fuel distributors in the region. The company is also the exclusive developer for the Circle K brand in Delaware, Maryland, Virginia and Washington, DC.  The company currently operates 71 locations in Virginia and Maryland, most of which are branded Circle K.  MACS is based in Richmond, VA (www.midatlanticcstores.com) (www.circlekmacs.com).

During its course of ownership, Catterton drove operational retail improvements at MACS by unifying store brands, enhancing store presentations, implementing merchandise resets and focusing on refreshments and foodservice.  These efforts resulted in same store sales growth of more than 46% over the last two years (excluding fuel).

“Our investment in MACS represents another successful strategic partnership for Catterton.  MACS is now a leading convenience store operator in the Mid-Atlantic region, with an attractive portfolio of stores and strong retail offering.  We are pleased to have participated in MACS’ success during our three years of ownership and believe it remains well-positioned for continued growth and success within the Sunoco organization,” said Scott Dahnke, Co-Managing Partner of Catterton Partners.

Catterton Partners focuses exclusively on the consumer industry and invests in all major segments including food and beverage; retail and restaurants; consumer products and services; and media and marketing services. Catterton was founded in 1989 and has more than $4 billion in capital under management. The firm is located in Greenwich, CT (www.cpequity.com).

© 2013 PEPD • Private Equity’s Leading News Magazine • 10-4-13

ABRY Partners Adds to Insurance Platform

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confie NFConfie Seguros, a portfolio company of ABRY Partners and a national insurance broker, has acquired three insurance brokerages with the purchases of James S. Sullivan Agency, Advanced Auto Insurance, and Family Insurance. The addition of these three agencies is part of Confie’s continued strategy to build out its geographic footprint throughout New York and Texas and solidify its position as a leading national insurance broker.

James S. Sullivan Agency was founded in 1977 and is an independently owned agency operating 16 retail locations in numerous towns across the Buffalo, Rochester and Syracuse Regions with 41 employees (www.jamessullivanagency.com).

Advanced Auto Insurance, established in 2001, is a full-service independent agency with locations in downtown Rochester, NY and Greece, NY (www.advancedinsuranceagency.net).

Family Insurance was established in 1990 and serves the Corpus Christi, TX area through two retail locations (www.familyautoinsurance.com).

“New York and Texas are key growth markets for Confie Seguros.  By adding James S. Sullivan Agency and Advanced Auto Insurance to our existing New York operations, we now have over 47 locations and 140 employees in New York to service customers and place business with our insurance carrier partners,” said Joe Waked, CEO of Confie Seguros. “Family Insurance builds on our acquisition in Texas earlier this year and we look forward to leveraging our robust pipeline of deals to continue our expansion in New York and Texas with the goal to be one of the largest providers of personal lines and small commercial insurance.”

Confie Seguros is a national insurance distribution company primarily focused on the insurance needs of Hispanic consumers. Confie Seguros has annual revenue approaching $300 million with over 540 retail locations. The company has leading market positions in California, Arizona, Texas, Florida, Washington, Oregon, New York, New Jersey,  Nevada, Illinois, Alabama, Kansas, Wisconsin, South Carolina, Missouri, Louisiana,  and Indiana and expects to continue its expansion in those and other states, including  Georgia, Virginia and North Carolina.  The company was founded in 2008 and is based in New York (www.confieseguros.com).

ABRY Partners invests in the media, communications and information sectors. ABRY is currently investing ABRY Partners VII (a $1.6 billion fully-capitalized traditional private equity fund), ABRY Senior Equity III (a $750 million fully-capitalized senior equity/mezzanine fund) and ABRY Advanced Securities Fund II (a $1.2 billion fully-capitalized senior debt fund). The firm is headquartered in Boston (www.abry.com).

© 2013 PEPD • Private Equity’s Leading News Magazine • 10-4-13

Lewis Hay III to Join CD&R as Operating Advisor

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hay nfLewis Hay III, former Chairman of NextEra Energy will become an Operating Advisor of Clayton, Dubilier & Rice beginning in January 2014. Mr. Hay will assist CD&R in a range of activities, including sourcing transactions, evaluating investment opportunities and advising portfolio company management teams.

“Lew is a proven business builder whose leadership record is one of delivering strong and sustainable financial and operating performance,” said Donald Gogel, Chairman and Chief Executive Officer of CD&R. “Lew’s entrepreneurial management style and industry expertise will be a valuable complement to the firm’s existing operating capabilities.”

Mr. Hay is the Executive Chairman and former Chairman, President and Chief Executive Officer of NextEra Energy (NYSE: NEE), a clean-energy company with 2012 consolidated revenues of approximately $14.3 billion and nearly 15,000 employees across 26 states and Canada. Mr. Hay first joined NextEra Energy in August 1999 as Chief Financial Officer. In 2001, he was elected President and Chief Executive Officer, and in 2002, named Chairman of the Board. Mr. Hay served as Chairman, President and Chief Executive Officer until 2012 when he was appointed Executive Chairman. During his tenure, NextEra Energy more than doubled its operating income, more than tripled its market capitalization, and consistently outperformed the S&P 500 and S&P Utilities Index.

“I very much look forward to working with the CD&R team” said Mr. Hay. “I share CD&R’s value creation philosophy, which is based on spurring businesses to become operationally stronger, more customer focused and more effective competitors.”

Clayton, Dubilier & Rice focuses on producing financial returns through building stronger more profitable businesses. Since inception, the firm has managed the investment of more than $18 billion in 56 businesses representing a range of industries with an aggregate transaction value of approximately $90 billion. Founded in 1978, Clayton, Dubilier & Rice is based in New York and London (www.cdr-inc.com).

© 2013 PEPD • Private Equity’s Leading News Magazine • 10-4-13

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