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Archives for May 6, 2014

American Capital Hits 17% Return on Sale of Specialty Brands

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acas nf2American Capital has sold its portfolio company BCCK Holdings, parent to Specialty Brands of America, to B&G Foods.  American Capital and its affiliated funds received $93 million in equity proceeds and realized a gain of $60 million from the transaction.  American Capital first invested in Specialty Brands in December 2003.

Of the $93 million in total proceeds, American Capital received $54 million in equity proceeds, realizing a gain of $35 million and also recognized $20 million of dividend income and additional realized gains over the life of its investment.  American Capital’s compounded annual rate of return earned on its debt and equity was 17%, including interest, realized gains and fees.  American Capital received 2.2 times its equity investment, and realized a compounded annual rate of return of 19% over the life of its equity investment, including dividends and fees.

Specialty Brands of America (SBA) is a packaged foods company with a portfolio of brands in a variety of food categories.  The company’s largest brand is Bear Creek Country Kitchens, a brand of dry soups, pasta dishes and rice dishes.  Specialty Brands also offers Spring Tree, Cary’s and MacDonald’s pure maple syrups and pancake syrups, New York Flatbreads and Canoleo margarine.  Specialty Brands is based on Long Island in Westbury, NY (www.sbamerica.com).

American Capital invested $68 million in the acquisition of SBA in December 2003. American Capital’s investment took the form of a revolving credit facility, senior term debt, senior and junior subordinated debt, redeemable preferred stock and common equity.  In May 2005, American Capital invested an additional $55 million in a revolving credit facility, senior term loans, senior and junior subordinated debt and convertible preferred equity to support SBA’s acquisition of Bear Creek.

graff nf1“We are delighted with the results of our investment in SBA and proud of how the company excelled throughout our investment and solidified its leading position within the packaged foods industry,” said Brian Graff, American Capital Senior Managing Director.  “Our investment in SBA is an excellent example of American Capital’s One Stop Buyout strategy of investing in middle market companies with strong market positions and partnering with management teams to enhance performance, grow operations and create value.”

“Since our initial investment in 2003, we helped SBA achieve significant growth through acquisitions, new product launches and existing product enhancements,” said Jim Gregory, American Capital Principal, Buyouts Group.  “We are pleased to have supported SBA’s successful acquisition and integration of Bear Creek in 2005, which resulted in a new suite of nationally known food products as well as significant operational synergies.  SBA owns leading brands in the pure maple syrup, sugar free table syrup and hearty dry soups categories and we believe it is a direct fit for B&G Foods’ family of top brands.

“B&G Foods (NYSE:BGS) and its subsidiaries manufacture, sell and distribute a portfolio of branded shelf-stable foods across the United States, Canada and Puerto Rico. B&G Foods is based in Parsippany, NJ (www.bgfoods.com).

American Capital (NASDAQ: ACAS) is a publicly traded private equity firm and asset manager that originates, underwrites and manages investments of $10 million to $750 million in middle market private equity, leveraged finance, real estate and structured products. Founded in 1986, American Capital has $93 billion in total assets under management and has eight offices in the US, Europe and Asia.  The firm is headquartered in Bethesda (www.AmericanCapital.com).

“Our close working relationship with American Capital allowed us to significantly invest in our business to drive growth.  We worked together to expand our product offering, enhance distribution efficiencies and ultimately increase our profitability.  They understood our strategic vision for SBA and our products and together worked with us to advance SBA and as such, we are poised for even more growth under B&G Foods’ leadership,” said Dom Bastien, SBA Founder and Chief Executive Officer.

Evercore acted as exclusive financial advisor to American Capital on the transaction.

© 2014 PEPD • Private Equity’s Leading News Magazine • 5-6-14

Golub Backs Battery Ventures Recap

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golub2Golub Capital was the Sole Bookrunner and Administrative Agent on a senior credit facility to support the recapitalization of Data Innovations by Battery Ventures, which first invested in the company in 2010.

Founded in 1989, Data Innovations is a clinical and blood laboratory middleware company. The company products are used to manage laboratory operations, including pre-analytical, analytical, and post-analytical sample processing and non-clinical tasks such as equipment maintenance and specimen archiving.  Data Innovations is headquartered in South Burlington, VT and has additional offices in Belgium, Brazil, China, France, and the United Kingdom (www.datainnovations.com).

stoner nf1“Consistent with our past experiences, Golub’s deep understanding of the software and technology services industry, ability to offer value-added financing solutions across the capital structure, and efficient execution led to a smooth closing. We look forward to closing additional transactions with Golub in the future,” said Chelsea Stoner, a General Partner at Battery Ventures.

Golub offers buy-and-hold products ranging from $10 million to $75 million and includes one-loan financings, senior, 2nd lien and subordinated debt, preferred stock and co-investment equity. The firm underwrites and syndicates first lien loans up to $300 million. Golub Capital will hold up to $200 million per transaction. Industries of interest include consumer products, business and consumer services, defense, manufacturing, value-added distribution, media, healthcare services and restaurants. Golub has offices in New York and Chicago (www.golubcapital.com).

“With their strong market leadership, differentiated products, and excellent management team, Data Innovations is well positioned to capitalize on the attractive market dynamics within the laboratory middleware industry,” said Andy Steuerman, Head of Middle Market Lending at Golub Capital. “We are excited to partner with this exceptional company and sponsor.”

Battery Ventures invests in seed, early, growth and buyout opportunities in technology and related markets. Sectors of specific interest include software and services, web infrastructure, e-commerce, digital media and industrial technologies. The firm was founded in 1983 and is based in Boston with additional offices in Silicon Valley and Israel (www.battery.com).

© 2014 PEPD • Private Equity’s Leading News Magazine • 5-6-14

Monroe Capital Adds Levine Leichtman Debt Pro to Team

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monroe nf4Monroe Capital has hired Lee Stern as a new Managing Director in the firm’s New York office.  Mr. Stern comes to Monroe from Levine Leichtman Capital Partners where he was a Managing Director responsible for expanding the firm’s credit strategies platform. He joined Levine Leichtman in October 2012.

“We are very excited to add Lee Stern to the Monroe Capital team,” said Ted Koenig, President & CEO of Monroe Capital. “He has an accomplished career providing debt solutions to middle-market companies and brings with him creativity and structuring expertise across multiple industries. Lee will lead the Monroe effort in working with our important club and co-lending investment partners as well as assist in expanding the firm’s efforts in the junior capital area for both private equity sponsored and non-sponsored transactions.”

Prior to his time at Levine Leichtman, Mr. Stern was a Director and founding member of KKR’s mezzanine debt business where he was a key participant in raising the largest first time mezzanine fund at $1 billion in 2009. Prior to KKR, he was a Managing Director at Blackstone/GSO Capital Partners responsible for senior and mezzanine investments. Mr. Stern was also the Chief Transaction Officer at Technology Investment Management Corp., a business development company.  Mr. Stern has previously held Managing Director positions at Nomura Merchant Banking, Kidder, Peabody & Co., Inc. and Drexel Burnham Lambert.  Mr. Stern received a BA degree from Middlebury College and an MBA from the Wharton School of the University of Pennsylvania.

Monroe Capital is a specialty finance company providing senior and junior debt and equity co-investments to middle-market companies. The firm was founded in 2004 and maintains offices in Chicago, Atlanta, Boston, Charlotte, Dallas, Los Angeles, New York and San Francisco (www.monroecap.com).

© 2014 PEPD • Private Equity’s Leading News Magazine • 5-6-14

Swander Pace Invests in Recochem

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recochem nf1Swander Pace Capital has made an investment in Recochem, a specialty consumer and industrial chemical company.

Recochem is a producer, formulator, packager and wholesale distributor of windshield wiper fluids, engine coolants, diesel exhaust fluid, paint thinners, solvents, and other specialty chemicals sold in general merchandise, automotive aftermarket, and home improvement retailers through the Americas and Australia-Asia.  Recochem is headquartered in Montreal and has operations in the Americas, Australia, Europe, and the Asia-Pacific region (www.recochem.com).

“We look forward to partnering with Recochem’s existing management team and its founding family,” said Shawn Hecht, Managing Director at Swander Pace. “Recochem has been an industry leader for several decades and benefits from a strong corporate culture of innovation, intense focus on customer service, and genuine appreciation for the contributions of its employees around the globe. There is a significant opportunity to capitalize on the company’s momentum and to drive for continued growth through our partnership.”

The Recochem investment represents Swander Pace’s 10th acquisition in Canada over the last decade.

“Swander Pace has a strong track record of building successful customer-oriented businesses in Canada and is an ideal partner to help us propel our business forward,” said Rick Boudreaux, CEO of Recochem. “This investment will facilitate further growth and provide financial support for infrastructure and technology enhancements, as well as strategic acquisitions. Our customers will benefit from this investment, and they can expect continued excellence with service and product innovations in the future.”

Swander Pace also holds investments in two other Canadian-based companies, including Lavo – a manufacturer and marketer of household cleaning products – and Kicking Horse Coffee, an organic and fair-trade coffee brand.  Swander Pace previously owned Liberté – the #1 organic yogurt in Canada – and Pineridge Bakery – a manufacturer of frozen and fresh baked goods for the foodservice, in-store bakery, convenience, and grocery channels.

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 that have up to $400 million in revenues. Swander Pace was founded in 1996 and has offices in San Francisco, CA; Bedminster, NJ; and Oakville, ON (www.spcap.com).

© 2014 PEPD • Private Equity’s Leading News Magazine • 5-6-14

Mill Road Capital Acquires R.G. Barry Corporation

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rgbarry nf1Mill Road Capital has signed an agreement to acquire all of the outstanding shares of R.G. Barry Corporation for $19 per share in cash, reflecting an equity value of approximately $215 million.  The company had TTM revenues at March 31st of approximately $140 million and TTM EBITDA of $20 million.

The merger agreement permits R.G. Barry to solicit alternative acquisition proposals from third parties through May 31, 2014 and R.G. Barry intends to do so under the direction of its Board of Directors and with the assistance of its financial advisor, Peter J. Solomon Company.

R.G. Barry Corporation (NASDAQ: DFZ) designs, develops and markets footwear, handbags, and foot care products for women in North America. The company offers slippers and sleepwear products, totes, insoles and comfort products, travel accessories, and leg and footwear products. The company’s products are sold through national chains, mass merchants, warehouse clubs, department stores, independent and specialty retailers, boutiques, catalogs, home shopping networks, and online retailers. R.G. Barry Corporation was founded in 1947 and is headquartered near Columbus in Pickerington, OH (www.rgbarry.com).

“We have been a shareholder of R.G. Barry for many years and are pleased to increase our existing 9.8% stake in this great company,” said Scott Scharfman, Managing Director of Mill Road.  “We have great confidence in the outstanding senior management team led by Greg Tunney and believe in their ability to successfully implement the long term strategic plan.”

Mill Road Capital is a private investment firm focused on investing in and partnering with publicly traded micro-cap companies in the US and Canada.  The firm currently has over $600 million of assets under management.  Mill Road Capital was founded in 2004 and is based in Greenwich, CT (www.millroadcapital.com).

“Mill Road has a clear understanding of our vision for the business. As a privately-held company, we expect to continue to invest in the long-term growth and acquisition strategies that we believe will propel RG Barry Brands into a true leader in the accessories marketplace. We look forward to this partnership,” said Greg Tunney, R.G. Barry chief executive officer and president.

© 2014 PEPD • Private Equity’s Leading News Magazine • 5-6-14

Morgan Stanley Exits Learning Care

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download (39)Morgan Stanley Global Private Equity has completed the sale of its majority interest in Learning Care Group (US) to American Securities. Learning Care Group is the second-largest provider of early childhood care and education services in the US.

howland nf1“We are pleased with the outcome of this investment, which was the result of partnering Morgan Stanley Global Private Equity’s operating-focused investment strategy with world-class executives to build a leading provider of early childhood education,” said Jim Howland, Managing Director and Operating Partner of Morgan Stanley Global Private Equity.

Learning Care Group provides early education and child care services to children ages 6 weeks to 12 years.  The company operates more than 900 schools (corporate and franchised) across 36 states, the District of Columbia and internationally, and has a system-wide capacity to serve more than 100,000 children.  Learning Care Group operates under five brands: La Petite Academy, Childtime, Tutor Time, The Children’s Courtyard, and Montessori Unlimited. The company is headquartered near Detroit in Novi, MI (www.learningcaregroup.com).

penn nf1“Learning Care is a great fit for our strategy of investing in market-leading companies,” said Kevin Penn, Managing Director at American Securities.  “We believe that Learning Care Group’s industry leadership, combined with its exceptional management team, positions the company for strong growth.”

American Securities invests in businesses with $500 million to $2 billion of revenues. Investments are undertaken with conservative financial structures that typically include only equity and senior debt. The firm aims to invest $150 million to $500 million of equity capital in each portfolio company. Sectors of interest include industrial manufacturing, specialty chemicals, aerospace and defense, energy, business services, healthcare, media, restaurants, and consumer products. The firm has more than $10 billion of capital under management and is currently investing from its sixth fund. American Securities has offices in New York and Shanghai (www.american-securities.com).

“Morgan Stanley Global Private Equity has been a highly valued partner during the past six years as we expanded our proprietary early childhood education programs and further sharpened our focus on providing outstanding customer service to the families in our care,” said Barbara Beck, Chief Executive Officer, Learning Care Group.

Morgan Stanley Global Private Equity, part of Morgan Stanley Investment Management, makes private equity and equity-related investments of $75 million to $150 million in companies with enterprise values of $100 million to $1 billion. To date, Morgan Stanley Global Private Equity and its affiliated funds have invested over $6 billion of equity across a variety of industries. The firm is based in New York (www.morganstanley.com/privateequity).

BofA Merrill Lynch and BMO Capital Markets acted as financial advisors to Learning Care Group.

© 2014 PEPD • Private Equity’s Leading News Magazine • 5-6-14

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