Archives for May 27, 2014

Baird Sells American Auto Auction Group to Huron

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Baird Capital’s US Private Equity group has completed the sale of its portfolio company American Auto Auction Group (AAAG) to Huron Capital Partners.

“When we created American Auto, our goal was to build a national full-service, dealer-centric re-marketing platform by pulling together a group of strong independent auctions, and layering on new services,” said Randy Mehl, Partner with Baird Capital’s Private Equity group. “Over the last few years, we worked with AAAG’s management team to expand the company’s footprint through several acquisitions in targeted regions, while adding financing and technology capabilities to those businesses.”

Baird Capital established American Auto Auction Group in 2010 to execute an acquisition platform strategy in the whole car auction market. During the course of ownership, AAAG acquired six auction businesses, and the number of cars run through auction annually has grown from approximately 55,000 to more than 215,000. The company’s acquisitions include Auctions in Motion (Westlake Village, CA), Badger State (Fond Du Lac, WI), Charleston Auto Auction (Moncks Corner, SC), Mid-South Auto Auction (Pearl, MS), Texas Lone Star Auto Auction (Carrollton, TX) and Your Auction (Tampa, FL). The company is headquartered in Charleston, SC (www.americanaag.com).

“Baird’s credibility as a financial partner, commitment to the strategy, and extensive network of contacts were important drivers for our expansion, and we thank them for all of the contributions they have made,” said Darris McClure, AAAG President.

Baird Capital, the direct private investment arm of Robert W. Baird & Co., invests in lower middle-market companies in the manufactured products, healthcare and business services sectors. The firm invests from $15 million to $35 million in companies with enterprise values of $25 million to $125 million and EBITDAs greater than $5 million. Baird Capital was founded in 1989 and is based in Chicago (www.bairdcapital.com).

In acquiring AAAG, Huron partnered with industry veteran Cam Hitchcock, who will join AAAG as CEO. Mr. Hitchcock is an experienced industry veteran having recently served as the Executive Chairman of Primeritus Financial Services and Partner at Elysian Advisors. He has also served on the boards of two private equity-backed auction remarketing companies. Earlier, he was President and CEO-Dealer Services Group and Corporate CFO of ADESA, an automotive auction and remarketing services company.

“I am honored and excited to partner with Huron and the AAAG senior management team. We have closely watched the dealer sale market segment over the last 24 months and believe that there are significant opportunities to better serve dealer consignors in many US markets. Our objective is to provide AAAG’s customers with highly responsive, tailored service offerings across multiple geographies. Huron has committed significant capital to enhance and scale this platform, and we look forward to deploying it,” said Mr. Hitchcock.

“Huron is very excited to partner with the AAAG family of auctions, their employees, and customers to continue building what we believe is the preeminent national auction group focused primarily on dealer to dealer sales. In the years to come, we intend to make a difference in the lives of people by investing in our team and the communities we serve,” said Peter Mogk, Senior Partner at Huron.  “We know from experience that value-added customer service begins with equipping our people with the best facilities, training and career opportunities. We believe we have ample resources dedicated to build, grow and acquire auctions that embrace technology and ever-changing customer needs.”

Huron Capital Partners invests up to $70 million per transaction in middle market companies that have revenues up to $200 million and EBITDAs of $5 million or more. Sectors of interest include education & training, healthcare, specialty chemicals, specialty packaging, consumer products, home decor, business services, industrial manufacturing, food & beverage, and marketing services. The firm was founded in 1999 and currently manages over $1.1 billion in committed equity through four private equity funds. Huron Capital Partners has offices in Detroit and Toronto (www.huroncapital.com).

2014 PEPD • Private Equity’s Leading News Magazine • 5-27-14

Apollo Completes Buy of Classic Party Rentals

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Classic Party Rentals, an event rental and services provider, has completed its acquisition by Apollo Global Management.  Classic’s sale marks the completion of its financial restructuring process through chapter 11, after the sale transaction and financial reorganization was approved by the United States Bankruptcy Court for the District of Delaware on April 29, 2014.

“Today marks the beginning of a new chapter for Classic Party Rentals,” said Jeff Black, Classic Party Rental’s President and Chief Executive Officer. “With this transaction completed, we have successfully emerged with a strengthened and streamlined capital structure, significantly less debt, and the financial flexibility to continue investing in the business, our people and our clients. We are delighted to have such a strong partner as Apollo supporting our team as we execute our strategic vision for the business.”

Classic Party Rentals is a full-service event rental company with over 30 locations nationwide. The company services most major markets across the US with its china, glassware, flatware, specialty linen, lounge furniture, lighting, heating, flooring and kitchen and catering equipment. Classic is also a nationwide provider of tents and clearspan structures under the brand, Classic Tents as well as providing multi-location services within the brand Classic Event Solutions. In addition to providing event rentals, Classic offers sales support and product and event management for more than 150,000 events per year including major sporting events, brand promotion, corporate events, celebrity weddings, charity events and private social events. The company is headquartered in Inglewood, CA (www.ClassicPartyRentals.com).

“With the recapitalization of Classic Party Rentals completed, we look forward to working with the company’s management team as they capitalize on the attractive growth opportunities in the event rental and services industry. Classic is uniquely positioned as the leader in their industry, and we believe the company has a bright future ahead,” said Jason Scheir of Apollo.

Apollo is a global alternative investment manager with offices in New York, Los Angeles, Houston, Toronto, London, Frankfurt, Luxembourg, Singapore, Mumbai and Hong Kong.  Apollo has total assets under management of approximately $161 billion in private equity, credit and real estate funds invested across a core group of nine industries (www.agm.com).

Classic Party Rentals is being advised in this transaction by Jefferies (www.jefferies.com), FTI Consulting (www.fticonsulting.com), and White & Case (www.whitecase.com). 

2014 PEPD • Private Equity’s Leading News Magazine • 5-27-14

Sycamore Completes Investment in Aeropostale

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Aeropostale has entered into definitive agreements with respect to its previously announced strategic partnership and $150 million senior secured credit facilities with Sycamore Partners.

Aeropostale (NYSE: ARO) is a primarily mall-based, specialty retailer of casual apparel and accessories, principally targeting 14 to 17 year-old young women and men through its Aeropostale stores and 4 to 12 year-old kids through its P.S. from Aeropostale stores. The company currently operates 864 Aeropostale stores in 50 states and Puerto Rico, 78 Aeropostale stores in Canada and 151 P.S. from Aeropostale stores in 31 states and Puerto Rico. In addition, through various licensing agreements, the company operates an additional 99 Aeropostale locations and one Aeropostale and P.S. from Aeropostale store. Aeropostale is headquartered in New York (www.aeropostale.com).

The senior secured credit facilities consist of a five-year $100 million term loan facility and a ten-year $50 million term loan facility that includes a sourcing arrangement with MGF Sourcing, a portfolio company of Sycamore Partners and one of the largest apparel sourcing, manufacturing, and supply chain companies in the world. Formerly part of L Brands, MGF Sourcing was acquired by Sycamore Partners in November 2011.

Under the terms of the agreement, Aeropostale will also issue convertible preferred stock to Sycamore Partners. The convertible preferred stock gives Sycamore Partners the right to acquire up to 5% of the company’s common stock at an exercise price of $7.25, the closing price of the company’s common stock on March 12, 2014. Combined with Sycamore Partners’ current ownership of Aeropostale’s outstanding common stock, Sycamore Partners’ ownership on an as-converted basis would increase to approximately 12.3% of the company’s outstanding common stock.

The sourcing partnership with MGF Sourcing will result in Aeropostale’s commitment to complete minimum merchandise purchases each year for ten years. As the company fulfills its minimum purchase requirements under the sourcing partnership, all amortization payments of the associated ten-year $50 million term loan facility will be fully rebated.

In connection with the closing of the transaction, the company has appointed two new members to its Board of Directors: Stefan Kaluzny, managing director at Sycamore Partners, and Julian Geiger, former Director and Chief Executive Officer of Crumbs Bake Shop and former Chairman and Chief Executive Officer of Aeropostale and, Arthur Rubinfeld is stepping down as a director of the company.

“We continue to believe there is tremendous value in Aeropostale’s business.  We are very pleased to partner with the company’s other Board members and management team to help Aeropostale realize the full potential of its brand,” said Mr. Kaluzny.

In addition, the company’s Board of Directors will nominate Kenneth Gilman, currently a director of Zale Corporation and Kate Spade & Co., for election by the company’s stockholders as an independent director at the company’s annual stockholder meeting this year. Mr. Gilman was mutually selected by the company’s Board and Sycamore Partners.

Sycamore Partners invests in consumer and retail companies. The firm has more than $1 billion of capital under management and is based in New York (www.sycamorepartners.com).

2014 PEPD • Private Equity’s Leading News Magazine • 5-27-14

TCF Capital Backs Corridor Buy of Innovative Office Products

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TCF Capital Funding has provided $10 million in secured financing to support the acquisition of Innovative Office Products by Corridor Capital.

Innovative Office Products (IOP) is a manufacturer of ergonomic mounting solutions for flat panel monitors, notebooks, tablet PCs and control panels.  IOP offers more than 5,000 SKUs to a base of blue chip customers that includes commercial furniture OEMs, IT and office equipment distributors and VARs, healthcare equipment OEMs and other niche end-markets such as education and financial services across the US and international markets. The company is headquartered north of Philadelphia in Easton, PA (www.lcdarms.com).

“IOP is a leader in this niche segment, and we are excited to partner with Corridor Capital in its investment in IOP,” said TCF Capital Funding Senior Vice President Jim Kuncl. “The company’s management team has an excellent track record, and we look forward to supporting Corridor Capital as it grows the business.”

TCF Capital Funding provides asset-based loans and private equity sponsor-backed cash flow loans to companies with less than $100 million in revenue and between $2 million and $10 million in EBITDA.  The firm is led by Joseph Gaffigan, President, and is based just outside Chicago in Burr Ridge, IL (www.tcfcapitalfunding.com).

“We are extremely pleased to partner with the IOP team,” said Craig Enenstein, CEO of Corridor. “We look forward to assisting the business as it goes through its next stage of infrastructure development, product innovation and growth.”

Corridor Capital makes control investments of $3 million to $12 million in mid-market companies with EBITDAs of $2 million to $5 million. Sectors of interest include specialty manufacturing, business services, and environmental services. Corridor focuses on complex situations, particularly those requiring growth support or operational or financial engagement. Corridor’s investor base includes approximately 150 executives across an array of industries and disciplines that the firm uses as an active resource for its portfolio companies and their teams. The firm is based in Los Angeles (www.corridorcap.com).

“Corridor has a proven track record of helping small market businesses build lasting value over time. With Corridor’s involvement, we anticipate accelerating our growth and investing in the resources necessary to lead the industry in quality and innovation well into the future,” said Joe Tosolt, CEO of IOP.

2014 PEPD • Private Equity’s Leading News Magazine • 5-27-14