To complete the recapitalization, A&E raised $275 million of financing, including a $65 million revolving credit facility and a $210 million term loan. The proceeds of new debt were used to refinance existing debt and to fund an $80 million cash distribution to stockholders. Financing for the recapitalization was provided by Merrill Lynch, HSBC, JP Morgan, and PNC Capital Markets.
A&E is the largest US manufacturer and the world’s second-largest manufacturer and distributor of industrial and consumer sewing thread, embroidery thread and technical textiles. A&E thread is used by producers of apparel, automotive components, home furnishings, medical supplies, footwear and certain industrial products. The company owns or operates 28 manufacturing facilities and employs over 9,000 people around the world directly or in partnership with joint venture partners. A&E is headquartered northwest of Charlotte in Mt. Holly, NC (www.amefird.com).
“A&E’s dividend recapitalization validates the transformation A&E has experienced since KPS invested in our company and we are pleased to return capital to our stockholders,” said Fred Jackson, Chief Executive Officer of A&E. “Under KPS ownership, A&E has purchased Gutermann, one of the world’s leading manufacturers and distributors of premium, high-quality sewing thread products for consumer and industrial applications, as well as full control of several of the company’s joint ventures located throughout Asia.”
According to the company, following the recapitalization A&E remains conservatively capitalized and KPS remains the controlling shareholder. “Our conservative capital structure and the financial support of our stockholders provide us with the resources to support the company as it continues to successfully expand into adjacent geographies, products and end-markets, both organically and through acquisitions,” added Mr. Jackson.
Earlier this month, KPS completed another portfolio company dividend recapitalization when it recapped Anchor Glass Container (acquired in April 2014) through a new $465 million term loan. The proceeds were used to refinance outstanding debt and fund a $150 million cash distribution to stockholders. The bank group for this transaction included Credit Suisse and Barclays Bank.
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 that invests in restructurings, turnarounds and other special situations. KPS targets manufacturing and industrial companies 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 $6 billion, operate 98 manufacturing plants in 23 countries, and employ over 42,000 people worldwide. KPS Capital Partners is headquartered in New York (www.kpsfund.com).
© 2015 PEPD • Private Equity’s Leading News Magazine • 7-21-15