September 8, 2016
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Archives for September 8, 2016

Monomoy Hits 4x on Continental Midland Sale

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CMG nf3Monomoy Capital Partners has completed the sale of Continental Midland, a maker of metal fasteners, to Agrati Group.

midland nf5Continental Midland (CMG) designs, manufactures and distributes custom-engineered metal fasteners to automotive companies, Tier I automotive suppliers and industrial manufacturers. The company’s products include internally- and externally-threaded nuts and bolts, and screws that are used in restraint systems, airbags, door hardware, and ride control systems. The company, led by CEO Phil Johnson, is headquartered south of Chicago in Park Forest, IL and operates six manufacturing facilities throughout the Midwest (www.contmid.com).

“Monomoy has a deep bench of talented investment and operating professionals committed to working with middle market companies and they were an invaluable partner throughout the transformation of Continental Midland over the past two years,” said Mr. Johnson.

Stephen Presser nf1The sale of Continental Midland is expected to produce a 4x return on investment for Monomoy. “Continental Midland is a great example of Monomoy’s core investment strategy,” said Stephen Presser, a Partner at Monomoy. “In July of 2014 we purchased a family-owned collection of related manufacturing businesses, leveraged the firm’s unique operational capabilities to drive free cash flow and increase earnings, and successfully sold CMG as a growing company to a strategic buyer. Our approach to value creation created substantial returns for our investors over a 25-month hold period in a challenging industry.”

Monomoy makes control investments of debt and equity of $25 million to $150 million in companies with $100 million to $600 million in annual sales. Sectors of interest include manufacturing, distribution, and consumer products.  The firm is headquartered in New York (www.mcpfunds.com).

Jaime McKenzie nf1“We acquired CMG with the goal of rationalizing its cost structure, optimizing its product mix, professionalizing management, and positioning the company for growth,” said Jaime McKenzie, a Director at Monomoy. “With a new management team in place, CMG is now among the leaders in quality, service and new product development for both the automotive and industrial fastener markets.”

agrati nf1The Agrati Group is a maker and distributor of fastening systems – such as bolts, screws, nuts and rivets – used in automotive components, appliances, construction and agriculture equipment, and heavy trucks.  Including the operations of Continental Midland, the Agrati Group will now have annual revenues of over €640 million (US$700 million), with 12 manufacturing plants, 5 logistic centers and 2,500 employees. The company is headquartered in Veduggio con Colzano, Italy (www.agrati.com).

William Blair & Co. (www.williamblair.com) was the financial advisor to Continental Midland and Duff & Phelps (www.duffandphelps.com) was a special advisor to Monomoy. Kirkland & Ellis (www.kirkland.com) provided legal counsel to both Continental Midland and Monomoy.

© 2016 Private Equity Professional • 9-8-16

CenterOak Acquires Wetzel’s Pretzels

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wetzels nf1CenterOak Partners has completed a majority investment in Wetzel’s Pretzels, the second largest owner and franchisor of soft pretzel stores.

wetzels nf22Wetzel’s menu includes fresh baked soft pretzels, Wetzel Dogs, Wetzel Bitz pretzel bites, fresh lemonade and other beverages. The company’s stores are located in shopping malls, outlet centers, theme parks, discount retail stores, train stations and airports and today totals 305 locations in 28 states and six countries. Wetzel’s was founded in 1994 and is headquartered in Pasadena, CA (www.wetzels.com).

“Our company has achieved significant growth since Rick Wetzel and I founded Wetzel’s Pretzels in 1994, but we know that there is opportunity to further develop our brand,” said Bill Phelps, Chief Executive Officer and co-founder of Wetzel’s Pretzels. “CenterOak’s team has a long track record of building value in consumer companies as well as partnering with companies to expand their footprint within the US. We look forward to leveraging the firm’s expertise to continue to support and grow our network of franchise partners and to bring innovative new products to market.”

centeroak nf4CenterOak makes equity investments of $20 million to $90 million in companies with enterprise values of $50 million to $250 million. Sectors of interest include manufacturing, consumer and business services.  The firm held a final close of its first fund – CenterOak Equity Fund I, LP – with total commitments at the hard cap of $420 million in August 2016. CenterOak was launched in September 2014 by Randall Fojtasek, former co-founder and co-chief executive officer of Brazos Private Equity Partners. He leads the firm alongside former Brazos senior executives Michael Salim, Lucas Cutler, Jason Sutherland and William Henry. These five executives have worked together for nearly 15 years. CenterOak is headquartered in Dallas (www.centeroakpartners.com).

Randall Fojtasek nf2“Wetzel’s has demonstrated consistent, stable growth in its more than two decades of operation, and has developed an exceptional brand,” said Mr. Fojtasek, Managing Partner of CenterOak. “Our proven approach of identifying opportunities for operational improvement and experience expanding companies’ product offerings and reach makes us well suited to support the company and its management team’s strategic vision.”

Gibson, Dunn & Crutcher (www.gibsondunn.com) provided legal counsel to CenterOak and Golub Capital (www.golub.com) provided financing for the transaction. North Point Advisors (www.nptadvisors.com) was the financial adviser to Wetzel’s Pretzels.

© 2016 Private Equity Professional • 9-8-16

Breakaway Backs Galaxy Gaming

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galaxy gaming nf1Breakaway Capital, through its Breakaway Capital Partners Fund, LP, has provided a $10.5 million senior secured credit facility to Galaxy Gaming.

The new $10.5 million term loan – which matures in 2021 and has a six-month interest only period, then amortizes at 10% per year until maturity –  refinances existing long-term debt which was used to acquire Prime Table Games in 2011.  “We are excited to have Breakaway Capital as our financing partner.  Breakaway’s ability to be creative, flexible and close quickly was a tremendous benefit to us,” said Gary Vecchiarelli, CFO of Galaxy Gaming.

galaxy nf55Galaxy Gaming (OTC: GLXZ) designs, develops, manufactures, and distributes proprietary casino table games and associated technology, platforms, and systems for the casino gaming industry. Customers include land-based, riverboat, cruise ships and online casinos worldwide. Through its iGaming partner, Games Marketing Ltd., Galaxy Gaming licenses its table games to the online gaming industry.  Examples of some of Galaxy’s games can be played online at www.FeelTheRush.com. The company has an installed base of products on over 4,000 gaming tables located in over 500 casinos, which – according to the company – positions Galaxy Gaming as the largest independent provider of proprietary table games in the world. Galaxy Gaming is based in Las Vegas (www.galaxygaming.com).

mike connally nf4The Galaxy Gaming transaction represents Breakaway’s seventh investment through its first fund. “We are thrilled to provide debt financing to Galaxy Gaming. The company has an impressive recurring business model and has continued to show tremendous growth. This is Breakaway’s largest transaction to date and is representative of our strategy to provide complete one-stop financing solutions for lower middle market companies, financial sponsors and independent sponsors,” said Mike Connolly, a Partner of Breakaway Capital.

breakaway nf4Breakaway Capital has $150 million of committed capital under management and provides senior debt, subordinated and mezzanine debt, unitranche structures, structured equity and common equity to companies with up to $10 million of EBITDA.  The firm targets leveraged buyouts, acquisitions, recapitalizations, restructurings and growth capital for both sponsored and non-sponsored transactions. Breakaway Capital Partners was founded by Warren Woo and Mike Connolly and is based in Los Angeles (www.breakawaycap.com).

Galaxy Gaming was advised by specialist investment bank Union Gaming Securities (www.uniongaming.com) and Cascadia Capital (www.cascadiacapital.com).

© 2016 Private Equity Professional • 9-8-16

Harvest Invests in OTG Management

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OTG nf1Harvest Partners SCF – the non-control private equity strategy of Harvest Partners – has led a $250 million investment in OTG Management, a New York-based operator of airport food and beverage concessions.

OTG nf55OTG operates proprietary restaurants and offers concession management services in which it designs, develops, operates and manages entire terminal concession programs.  The company’s portfolio includes more than 230 restaurant locations at 26 terminals across 11 airports. The company, founded in 1996 by CEO Rick Blatstein, employs over 4,500 people and is based in New York (www.otgmanagement.com).

Joseph Hegenbart nf1The investment from Harvest Partners SCF (HP SCF) will support OTG’s expansion to new airport locations. “Rick and the OTG team are pioneering the evolution of airport food and beverage programs.  He is a creative leader, and exactly the type of founder/owner we seek to support with our flexible, non-control private equity investment solutions,” said Jay Hegenbart, Senior Managing Director and Portfolio Manager for HP SCF.

harvest partners nf3Harvest Partners SCF targets private equity-like returns while assuming risks more characteristic of debt investments.  The group targets investments of $20 million to $75 million in companies where the business owners need equity capital but do not wish to dilute or sell their ownership. Target companies will have revenues of $100 million to $750 million and be active in the following sectors: business and consumer services; healthcare services; industrial and energy services; manufacturing; and distribution.  HP SCF, founded in 2014, is headquartered in New York (www.hp-scf.com).

“OTG’s strategy puts the company at the forefront of the hospitality sector, and positions it as a clear leader in airport foodservice,” said Sean Murphy, a Principal at HP SCF.  “It is no surprise that, as an acknowledgement of the company’s success, OTG ranked among the World’s 50 Most Innovative Companies in Fast Company Magazine and has received numerous other awards and accolades.”

In addition to Mr. Hegenbart and Mr. Murphy, Caldwell Zimmerman and Jerry Chan of HP SCF also worked on this transaction.

Piper Jaffray & Co. (www.piperjaffray.com) was the financial advisor to HP SCF and Latham & Watkins (www.lw.com) served as legal counsel.

© 2016 Private Equity Professional • 9-8-16

Envoy Management Launched in New York

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envoy nf1Envoy Capital Management, a new investment firm focused on providing debt and equity funding to independent sponsors, family offices and owner-operators for buyouts and recapitalizations, has been launched by Neil Marks and Norm Lieu.

Envoy will invest from $5 million to $30 million of subordinated and mezzanine debt, unitranche debt and equity co-investments in US-based companies with $20 million to $200 million of annual revenues and $5 million to $25 million of annual EBITDA.

neil marks nf1Mr. Marks has over 30 years of experience in lower middle market direct debt sourcing, execution and portfolio management. Prior to co-founding Envoy, he was a co-founder of Praesidian Capital, a New York-based provider of senior and subordinated debt to lower middle market businesses. Before Praesidian, he was the EVP and Division Head of Heller Financial’s New York and Boston offices.

“With our complementary skill sets, deep personal networks and shared history of investing together, we believe Envoy is well positioned to take advantage of a fluid private equity landscape and the growing importance of independent sponsors and family offices,” said Mr. Marks.

Norm Lieu nf1Mr. Lieu has over 15 years of experience in leveraged finance, new business diligence and management advisory. Prior to co-founding Envoy, he was a Principal at Praesidian Capital and a turnaround advisor at CDG Group, a New York-based restructuring advisory firm.

“We are pleased with the market’s reception to our strategy and are committed to being an active partner for the companies and operators we support,” said Mr. Lieu.

Envoy Capital Management is based in New York (www.envoymanagement.com).

© 2016 Private Equity Professional • 9-8-16

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