Abacus Finance Group was the Administrative Agent and Lead Arranger for a senior secured credit facility to back the buy of Biochemical Diagnostics by Kova International, a portfolio company of One Rock Capital Partners, Laurel Crown Partners, and StoneCreek Capital.
Biochemical Diagnostics is a manufacturer of controls and disposable sample preparation products used in drugs of abuse testing. The company’s products are used in toxicology and clinical laboratories and also in handheld devices for point of care testing. Biochemical Diagnostics was founded in 1981 by Allen Panetz and is headquartered in Edgewood, NY (www.biochemicaldiagnostics.com).
Kova International is a developer, manufacturer and marketer of urinalysis supplies for the medical laboratory market. Kova operates two product lines: (1) urinalysis control liquids which are used for automated and manual quality control testing; and (2) plastic disposables such as slides, tubes, petters (a transfer pipette with a bulb-like base) for use in manual microscopy urinalysis tests.
In February 2013, Abacus provided $16.5 million in senior secured debt to support the divisional spin out by One Rock of Kova International from Hycor Biomedical. “As was the case when Kova was acquired from Hycor Biomedical nearly three years ago, we chose to partner with Abacus because of their expertise in financing healthcare companies and ability to assure certainty of close early on,” said Kimberly Reed, a One Rock partner.
Abacus provides cash flow senior financing to private equity-sponsored, lower-middle market companies that have EBITDA between $3 million and $15 million. Debt facilities can be as large as $60 million with a typical hold size ranging from $10 million to $30 million. Abacus is an affiliate of New York Private Bank & Trust, the holding company for Emigrant Bank, founded in 1850. Abacus is based in New York (www.abacusfinance.com).
“One Rock has been terrific to work with, and they are a great fit for us given their investment strategy and their sector focus,” said Tim Clifford, President and CEO of Abacus. “Their due diligence preparation was very thorough, and their team meshed smoothly with ours. As in other transactions, the critical success factors came down to our flexibility and our ability to provide certainty of close – both important aspects of what we call our Total Partnership Approach.” Other Abacus team members involved in the transaction included Tim Wong and Brian Green.
One Rock makes control investments of $10 million to $60 million in companies that are active in the chemicals and process industries; specialty manufacturing and healthcare products; business and environmental services; and automotive retail. One Rock has a strategic relationship with Mitsubishi Corporation – the firm’s largest investor – which provides strategic resources to One Rock and its portfolio companies. One Rock was formed in 2010 by Tony Lee and Scott Spielvogel and is based in New York (www.onerockcapital.com).
“Because of their knowledge of Kova from the earlier transaction,” said One Rock Principal Joshua Goldman, “the Abacus due diligence process was efficient and quick, ensuring an on-time close of the transaction.”
The acquisition of Biochemical Diagnostics expands Kova’s product line into the drugs abuse testing area and provides the combined company with opportunities to cross-sell Biochemical Diagnostics’ products through Kova’s distribution network. Kova is headquartered in Garden Grove, CA (www.kovaintl.com).
© 2016 Private Equity Professional • 6-21-16
