Private equity firm Monomoy Capital Partners has completed a $52 million dividend recapitalization of its portfolio company Katun Corporation. The proceeds of the recapitalization were used in part to repay Katun’s existing debt and to pay a substantial dividend to Katun’s shareholders which, of course, includes Monomoy.
Katun is a supplier of OEM-compatible imaging supplies, photoreceptors, parts and accessories for single and multi function copiers, printers, and other imaging devices. The company has approximately 5,300 SKUs and sells to more than 12,000 customers in over 130 countries throughout the world. Katun has distribution facilities in the United States and Europe; warehouses in Mexico and Singapore; and 16 sales and customer service offices throughout the world. The company, with annual sales of about $240 million, is headquartered in Minneapolis (www.katun.com).
Since acquiring Katun in September 2008, Monomoy has consolidated the company’s distribution centers and sales offices, improved product mix and introduced new products. In November 2010, the company expanded its printer products with the acquisition of the assets of Media Science’s toner business including inventory, fixed assets, and intangibles for $11 million. Also during Monomoy’s ownership, the company introduced a web-based selling program and improved its working capital requirements through reductions in inventory. Justin Hillenbrand leads the investment in Katun for Monomoy.
The dividend returns all of Monomoy’s investment in the company plus an additional amount which was not specified. Monomoy owns Katun through its first fund, Monomoy Capital Partners, LP. Following the recapitalization, according to Monomoy, Katun is conservatively capitalized.
“Katun has been able to generate meaningful cash flow and earnings growth over the past 24 months, despite the substantial headwinds created by the strengthening US dollar,” said Sebastian Bretschneider, the Interim Chief Executive Officer of Katun. Today’s recapitalization validates Katun’s significant progress under the Monomoy value creation plan, and we are pleased to mark that transformation with a return of cash to our shareholders.”
Monomoy Capital Partners makes control investments in middle market businesses with $50 million to $500 million in annual sales. Sectors of interest include manufacturing, distribution, consumer product and foodservice industries. Over the past ten years, Monomoy has acquired over 40 middle market companies from a variety of sellers (including family owners, public companies, lenders and financial sponsors) in a wide range of special situations (including bankruptcy, asset sales, equity sales and restructurings). The firm was founded in 2005 and is headquartered in New York (www.mcpfunds.com).
HSBC Bank (www.us.hsbc.com) and Comvest Capital (www.comvest.com) provided Katun with financing for the recapitalization. Lampert Debt Advisors (www.lampertdebtadvisors.com) advised the company and Monomoy on the recapitalization. Kirkland & Ellis (www.kirkland.com) served as legal counsel to Katun in the transaction.
© 2016 PEPD • Private Equity’s Leading News Magazine • 1-26-16
