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
