Archives for July 21, 2017

Gamut Buys JPW from Tenex

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Gamut Capital has signed an agreement to acquire JPW Industries, a manufacturer, designer and distributor of shop tools and equipment, from Tenex Capital Management. Tenex has owned JPW since November 2013 when it was acquired from Switzerland-based Walter Meier AG.

JPW’s shop tools and equipment are sold under the JET, Powermatic, Wilton, Edwards and Promac brand names and include metalworking and woodworking machinery, vises and clamps, ironworkers, lifting systems, air and hand tools and related parts and accessories. The company has approximately 4,000 SKUs sourced from over 400 active supply partners and sells through a network of approximately 3,000 national and independent distributors, wholesalers, dealers, and online retailers.

During Tenex’ ownership of JPW, the company completed one add-on acquisition. In July 2016, JPW acquired Edwards Manufacturing, a family-owned manufacturer of industrial ironworkers, hydraulic accessory tools, ironworker tooling, punches and dies, and other specialty tools. The company was founded in 1875 and is headquartered in the southern Minnesota city of Albert Lea (www.edwardsironworkers.com).

JPW, founded in 1958, has more than 270 employees worldwide and is headquartered in the Nashville suburb La Vergne, TN (www.jpwindustries.com).

JPW is led by Robert Romano who will remain with the company as CEO under Gamut ownership. Mr. Romano will also join the company’s Board of Directors. “We have enjoyed our partnership with Tenex and deeply value their strategic input and guidance,” said Mr. Romano. “As we enter our next phase, we are excited to have the support of Gamut and look forward to leveraging their experience and resources as we continue to grow.”

At the close of the transaction, which is expected by the third quarter of this year, Stephen Van Oss, a Gamut Operating Partner, will join JPW’s Board of Directors as Non-Executive Chairman.

“JPW has set the standard for quality, reliability, innovation and service across a broad range of applications and end users,” said Stan Parker, Founding Partner of Gamut. “We are delighted to partner with JPW and its strong management team to accelerate its development.”

Gamut Capital invests from $50 million to $150 million in leveraged buy-outs, corporate carve-outs, strategic partnerships, and distressed-for-control situations. Industries of interest include agriculture, chemicals, telecom, industrials, mining, power, distribution, technology, energy, and transportation. The firm closed on its debut fund, Gamut Investment Fund I, LP, in January 2017 with $1 billion of capital commitments. Gamut Capital was founded in 2015 by Stan Parker and Jordan Zaken – both former senior partners at Apollo Global Management – and is based in New York (www.gamutcapital.com).

Tenex Capital Management, the seller of JPW, invests up to $100 million in middle-market companies in the industrial, manufacturing, and health and business services sectors. The firm has $452 million of committed capital and is based in New York (www.tenexcm.com).

Goldman Sachs Bank USA, BMO Harris Bank and BNP Paribas have providing financing commitments for the transaction. BB&T Capital Markets was the financial advisor to JPW and Goldman Sachs & Co. was the financial advisor to Gamut.

© 2017 Private Equity Professional | July 21, 2017

Twin Brook Has Big Fund II Close

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Twin Brook Capital Partners, the middle market direct lending subsidiary of Angelo, Gordon & Co., has held a final close of AG Direct Lending Fund II with total capital commitments of $1.6 billion, markedly above the $1.0 billion target. Including separately managed accounts, the total capital raised was $2.3 billion.

Twin Brook’s focus is on loans to private equity-owned companies with EBITDA between $3 million and $50 million, with an emphasis on companies with $25 million of EBITDA and below. Since its founding in the fourth quarter of 2014, Twin Brook has closed 110 transactions and provided total arranged commitments of over $3.2 billion.  The firm raised its first fund, AG Direct Lending Fund I, in 2016 with $850 million in total equity capital between the fund and separately managed accounts. The firm is led by Trevor Clark and Christopher Williams and is based in Chicago (www.twincp.com).

Fund II will target senior financing opportunities up to $200 million with hold sizes across the Twin Brook platform ranging from $25 million up to $100 million. Investments in second liens, mezzanine, unitranche and equity co-investments will also be considered.

“We are pleased with the strong reception that our second fund received from both new and returning limited partners, allowing us to close the our new fund well above target,” said Messrs. Clark and Williams in a released statement. “With $4 billion of buying power and over $5.6 billion of total committed capital, we are well positioned to continue to serve our borrowers and private equity clients investing in the US middle market.  Our highly experienced team, deep focus on the lower end of the middle market and differentiated platform have generated a strong pipeline of opportunities, and we are excited to put this fresh capital to work.”

The firm has been a very active lender. Highlights of recently closed transactions include:

  • Twin Brook provided debt and equity capital to back Inverness Graham’s July 2017 acquisition of SwipeClock, a provider of cloud-based workforce management software that is used for time and attendance tracking, absence management, workforce performance measurement, and regulatory compliance.
  • Twin Brook served as Sole Lead Arranger and Administrative Agent of the first lien senior secured financing for Audax Private Equity’s July 2017 acquisition of EnviroVac, a provider of industrial cleaning and maintenance services. The company utilizes high-pressure washing and vacuum equipment to service companies operating in the pulp and paper, chemical, steel, oil and gas, and power industries.
  • Twin Brook served as Sole Lead Arranger and Administrative Agent of the $80.5 million first lien senior secured financing for L2 Capital Partners’ May 2017 acquisition of Oracle Elevator Company. Oracle Elevator is a one of the larger, independent, and non-union providers of elevator maintenance, repair, and modernization services across all major brands of equipment.
  • Twin Brook served as Sole Lead Arranger and Administrative Agent on $30 million in financing to back High Road Capital Partners’ May 2017 buy of Storage Battery Systems, an assembler and distributor of branded, rechargeable industrial batteries and test equipment used in warehousing and logistics, and standby and uninterruptible power supply applications.

Angelo, Gordon & Co. is an alternative investor with a focus on credit, real estate, private equity, and other strategies. The firm, founded in November 1988, currently manages approximately $28 billion in capital and has over 420 employees, including 160 investment professionals. Angelo, Gordon & Co. is headquartered in New York with additional offices in San Francisco, Los Angeles, Chicago, Houston, London, Amsterdam, Hong Kong, Seoul, Frankfurt and Tokyo (www.angelogordon.com).

© 2017 Private Equity Professional | July 21, 2017

Arsenal Buys Division from PolyOne

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Arsenal Capital Partners has completed its $115 million buy of publicly-traded PolyOne Corporation’s Designed Structures and Solutions business segment through a new portfolio company, Spartech LLC.

PolyOne acquired publicly-traded Spartech Corporation in 2013 for approximately $390 million in cash and stock. At that time, Spartech had annual revenues of approximately $1.2 billion and an EBITDA of $56 million.

Spartech makes and sells packaging, visual and structural sheet, and other specialty products that are used in the food, medical, building and construction, aerospace, and automotive markets.  Company owned brand names include Polycast, Royalite and SoundX.  Spartech has 15 manufacturing facilities and is headquartered in the St. Louis suburb of Maryland Heights, MO (www.spartech.com).

With the closing of the transaction, Arsenal has named George Abd, an Arsenal Senior Advisor, as Spartech’s new CEO and President. Mr. Abd was an executive of the former Spartech Corporation for approximately 10 years including as its CEO until departing in July 2007.  Most recently he was CEO and President of St. Louis-based Pretium Packaging, a maker of rigid plastic containers and closures and a portfolio company of Genstar Capital, from January 2008 to January 2016.

“We have been fortunate to have had the opportunity to work with George over the last year on shaping our plastics and packaging strategy and were excited to work with him to carve out Spartech into an independent company,” said Tim Zappala, a Partner at Arsenal and Co-Head of the firm’s Specialty Industrials Group.  “We are very enthusiastic for the prospects of Spartech under George’s leadership, along with exceptional talent already within the business, and are encouraged we can leverage this acquisition as a broader platform with future acquisitions.”

Arsenal Capital Partners invests in middle-market specialty industrial and healthcare companies that have $100 million to $500 million in enterprise value.  Industries of specific interest include specialty industrials and healthcare companies. Arsenal has $1.7 billion of committed capital under management. The firm was founded in 2000 and has offices in New York and Shanghai (www.arsenalcapital.com).

© 2017 Private Equity Professional | July 21, 2017

Littlejohn to Buy Cornerstone Chemical

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Littlejohn & Co. has signed an agreement to acquire Cornerstone Chemical Company from H.I.G. Capital. In 2011, H.I.G. acquired the Building Block Chemicals segment of Cytec Industries for $180 million and renamed it Cornerstone Chemical Company. At that time, the segment had revenues of approximately $600 million.

Cornerstone is a producer of intermediate chemicals, including melamine, acrylonitrile, sulfuric acid, and urea that are used in a range of industrial and consumer applications such as water treatment, oil recovery, agriculture, plastics, furniture and flooring, and coatings. The company has an 800-acre chemical manufacturing and storage complex and employs approximately 460 people. Cornerstone, led by CEO Greg Zoglio, is headquartered near New Orleans in Waggaman, LA (www.cornerstonechemco.com).

Cornerstone is one of the largest producers of melamine – a raw material used for coatings, laminates, fire retardants, molding compounds, and wood adhesives – in North America; a leading manufacturer of acrylonitrile – used in the production of acrylamide, acrylic fibers, nitrile rubber, elastomers, ABS plastics, and surface coatings – in the US; and a major supplier of sulfuric acid – used as a drying agent in the production of industrial gases – in the Gulf Coast region.

“Cornerstone is a market leader with deep customer relationships, favorable industry dynamics, and numerous growth opportunities,” said Drew Greenwood, a Principal at Littlejohn. “We are delighted to be partnering with Cornerstone and its strong management team as the company accelerates its growth and expansion plans.”

Littlejohn makes control and non-control investments in middle-market companies that are undergoing a fundamental change in capital structure, strategy, operations or growth.  The firm invests from $50 million to $150 million of equity in middle market companies that have annual revenues of $100 million to $800 million.  Littlejohn invests across a range of industries and acquires manufacturers, distributors, and service providers.  The firm is currently investing from Littlejohn Fund V, LP, which has $2 billion in capital commitments.  Littlejohn is based in Greenwich, CT (www.littlejohnllc.com).

Goldman Sachs has provided committed financing to support the acquisition. KeyBanc Capital Markets was the financial advisor to Cornerstone.

This transaction is expected to close in August 2017.

© 2017 Private Equity Professional | July 21, 2017