Archives for March 17, 2017

Z Capital Acquires Steel Treatment Company

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Z Capital Partners has agreed to acquire Atmosphere Annealing LLC and NitroSteel LLC from publicly traded Gerdau SA, one of the larger steelmakers in the Americas.

Atmosphere Annealing (AA) provides metal heat treating services including annealing, normalizing and quenching & tempering to companies operating in the automotive, light and heavy truck, agriculture and energy sectors. The company is on the approved vendor list for a vast majority of OEMs, Tier I and II suppliers.  AA was founded in the 1970s and is headquartered in Lansing with four operating facilities in Michigan, Ohio and Indiana (click here for the AA web page).

NitroSteel (NS) provides nitro-carburizing services to steel products that are used in machinery and equipment in outdoor settings in the agricultural, energy, industrial, mobile equipment and military end-markets. Nitro-carburizing is a process of spreading nitrogen, carbon and oxygen atoms into the surface of a steel part (forming a compound layer at the surface and a diffusion layer) that improves wear resistance, better lubrication retention, dent resistance, and increases service life. NS is the only domestic provider of nitro-carburized bars and tubes in the 13-24′ range. The company has one facility located south of Milwaukee in Pleasant Prairie, WI (www.nitrosteel.com).

Atmosphere Annealing and NitroSteel operate under the name Premier Thermal Solutions (PTS). Z Capital intends to expand PTS’s metal heat-treating services by adding capabilities organically, through add-on acquisitions, and by expanding into additional end-markets. “PTS has substantial capacity, a strong management team and capabilities that, with increased focus and investment in sales, marketing and customer service resources, can be leveraged to attain both organic and strategic growth,” said James Zenni, Founder, President and Chief Executive Officer of Z Capital Group.

“Z Capital’s financial strength, acumen and operational expertise make them the ideal partner for PTS and we are excited to work with their talented team in the years to come,” said Steve Wyatt, Director of PTS.

Z Capital makes control investments in middle-market distressed companies, operational turnarounds and special situations. The firm targets companies with an enterprise value of less than $1 billion or EBITDA of less than $100 million. Sectors of interest include consumer products, steel and steel processors, agricultural, gaming, leisure, real estate, manufacturing, specialty services and automotive. Z Capital is based in the Chicago suburb of Lake Forest and has additional offices in New York and Zurich (www.zcapgroup.net).

Gerdau (NYSE: GGB), the seller of PTS, is the largest producer of long steel in the Americas, with steel mills in Brazil, Argentina, Canada, Chile, Colombia, Dominican Republic, Guatemala, India, Mexico, Peru, Spain, United States, Uruguay and Venezuela. Currently, Gerdau has an installed capacity of 26 million metric tons of steel per year and offers steel used in the construction, automobile, industrial, and agricultural sectors. The company is based in Porto Alegre, Brazil (www.gerdau.com).

The sale of PTS to Z Capital is expected to close within the next 30 days.

© 2017 Private Equity Professional | March 17, 2017

Aurora Sells DuBois Chemicals

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Aurora Capital Group has sold its portfolio company DuBois Chemicals to The Jordan Company. Aurora Capital acquired DuBois Chemicals in December 2012 from The Riverside Company.

DuBois Chemicals is a provider of customized specialty chemical solutions used in a variety of applications such as metal finishing and paint pretreatment; metalworking and lubricants; water and wastewater treatment; maintenance and equipment cleaning; paper chemicals; food processing cleaning and sanitizing; and transportation cleaning. The company has more than 8,000 customers and is led by Jeff Welsh, President and CEO. DuBois is headquartered north of Cincinnati in Sharonville, OH (www.duboischemicals.com).

Under Aurora’s ownership, DuBois completed a number of add-on acquisitions including Angler Industries (2014); American Finishing Resources (2014); Heatbath Corporation (2015); and C.A.R. (Complete Auto Restoration) (2015).

Co-investing on this transaction with The Jordan Company was The Riverside Company through the firm’s minority investment vehicle, The Riverside Strategic Capital Fund. This is the second time that Riverside has invested in DuBois Chemicals. Riverside acquired the company in 2008 from Racine, WI-based Johnson Diversey.

The Jordan Company is a middle-market private equity firm with over $6 billion of assets under management.  The firm was founded in 1982 and is headquartered in New York with an additional office in Chicago (www.thejordancompany.com).

Aurora Capital focuses principally on control investments in middle-market industrial, manufacturing and service oriented businesses. The firm, founded in 1991, has $2.5 billion of capital under management and is headquartered in Los Angeles (www.auroracap.com).

Harris Williams & Co. (www.harriswilliams.com) was the financial advisor to DuBois. The transaction was led by Patrick McNulty, Ryan Nelson, Brad Morrison, Trey Packard and Jenson Dunn of the firm’s Industrials Group.

© 2017 Private Equity Professional | March 17, 2017

MPE Acquires Plastic Components

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MPE Partners has acquired Plastic Components, a manufacturer of injection molded components used in the plumbing, small engine, automotive, filtration and other end markets.

Plastic Components (PCI) was founded in 1989 in a 10,000 sq. ft. facility with 3 molding presses. Today, the company has two facilities with a combined 78,000 sq. ft., over 80 fully-automated molding presses, and ships over 25 million parts per month to customers all over the world. PCI is headquartered north of Milwaukee in Germantown, WI (www.plasticcomponents.com).

MPE Partners (formerly Morgenthaler Private Equity) acquired the company in partnership with owner and CEO, Tom Duffey, and other members of the company’s senior management team. “We were very selective in choosing an investment partner for PCI and believe MPE will be a great steward for the company.  MPE will bring capabilities, resources, and capital to PCI to support our next chapter of growth,” said Mr. Duffey.

“Since its founding, PCI has developed a reputation for innovation, superior quality, collaborative technical support, and exceptional customer service,” said Karen Tuleta, a Partner at MPE.

MPE Partners invests in lower middle market companies that are valued from $25 million to $150 million and have EBITDAs between $5 million and $20 million. Sectors of interest include high-value manufacturing and industrial services. The firm has offices in Cleveland and Boston (www.mpepartners.com).

Stout Risius Ross (www.srr.com) was the financial advisor to PCI.

© 2017 Private Equity Professional | March 17, 2017

Aveanna Formed by Bain and J.H. Whitney

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Aveanna Healthcare has been formed by Bain Capital Private Equity and J.H. Whitney Capital Partners through the merger of Epic Health Services, a Bain portfolio company, and PSA Healthcare, a portfolio company of J.H. Whitney. Bain closed on the acquisition of Epic Health Services, a portfolio company of Webster Capital, just a few days ago.

According to Bain and J.H. Whitney, Aveanna Healthcare is now the largest pediatric home healthcare company in the nation with 180 locations in 23 states and 26,000 caregivers currently serving over 40,000 patients. Aveanna is led by Executive Chairman Rod Windley, CEO Tony Strange, and COO Jeff Shaner. All were formerly executives with PSA and Gentiva Health Services. David Hagey, CFO of Aveanna, was previously with Epic Health Services. Aveanna Healthcare is based in Atlanta (www.aveannahealthcare.com).

Epic Health Services has been a portfolio company of Webster Capital since August 2010. The company is a provider of pediatric home health and therapy services as well as adult home health services.  The company provides care to more than 38,000 patients and its services include nursing, therapy, personal care and behavioral health nursing. Epic was founded in 2001 and is based in Dallas (www.epichealthservices.com).

PSA Healthcare, acquired by J.H. Whitney in March 2015, is a provider of home care services for medically fragile children. PSA provides care to more than 2,500 patients across 16 states through over 78 offices. PSA is based in Atlanta (www.psahealthcare.com).

Bain Capital Private Equity was founded in 1984 and invests in the consumer and retail; financial and business services; healthcare; industrials; and technology, media and telecommunications sectors. The firm has offices in New York and Boston (www.baincapitalprivateequity.com).

J.H. Whitney invests in small and middle market companies that are active in the consumer, healthcare, specialty manufacturing, and business services sectors. The firm was founded in 1946 and is based in New Canaan, CT (www.whitney.com).

Webster Capital invests in branded consumer, business-to-business, and healthcare services companies with EBITDAs from $3 million to $15 million and transaction values from $20 million to $100 million. At present, Webster has $600 million under management and is currently investing its third fund which closed in 2014 with $400 million in capital commitments.  The firm was founded in 2003 and is based in the Boston suburb of Waltham (www.webstercapital.com).

Goldman Sachs (www.goldmansachs.com) was the financial advisor to Epic Health Services on this transaction and Edge Healthcare Partners (www.edgehealthcarepartners.com) advised PSA.

© 2017 Private Equity Professional | March 17, 2017