American Capital has agreed to sell its portfolio company Service Experts to Enercare for $341 million. Service Experts is considered to be one of North America’s largest providers of heating and air conditioning services.
Service Experts is a provider of HVAC services, including inspections, maintenance, sales and equipment installation. The company has residential and commercial customers in 29 states in the US and three provinces in Canada. Service Experts has approximately 2,800 employees and serves approximately 2,000 homes and businesses each working day. The company was founded in 1996 and is headquartered in Dallas with 90 additional locations, 41 of which are located in the top 100 US metropolitan areas (www.serviceexperts.com).
American Capital, which acquired Service Experts in March 2013, 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 $80 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).
Enercare (TSX: ECI) is one of Canada’s largest home and commercial services companies. The company provides water heaters, furnaces, air conditioners and other HVAC rental products, plumbing services, protection plans and related services to more than 1.2 million residential and commercial customers in Ontario, Canada. Enercare has approximately 1,000 employees and is headquartered in Toronto (www.enercare.ca).
“Through Service Experts, we become a North American market leader in home services,” said John Macdonald, President and CEO of Enercare. “The acquisition, which is a natural extension to our business, creates an opportunity to drive growth and create shareholder value.”
As part of this transaction, Enercare has entered into an agreement with a syndicate of underwriters led by National Bank Financial and TD Securities to issue approximately $218 million of subscription receipts (receipts that may be exchanged by the holder for common shares) to finance a portion of the purchase price with the remainder being financed with a $200 million committed unsecured 4-year variable rate term loan provided by Enercare’s existing lenders, Toronto-Dominion Bank and National Bank of Canada. In addition, the lenders have also provided a $141 million fully committed bridge facility should the receipts offering not close.
“We have fully committed financing to fund the transaction and believe that the financing structure for this transaction is consistent with our desire to maintain a stable conservative capital structure,” said Evelyn Sutherland, CFO of Enercare. “Post-closing we expect to retain our strong capital structure and have sufficient cash flow and other capital resources to fund growth and dividends.”
© 2016 Private Equity Professional • Private Equity’s Leading News Magazine • 3-9-16
