Kinderhook Merges Portfolio Companies

Kinderhook Industries has merged its portfolio companies Intergulf Corporation and STC Industrial to form CIRCON Environmental, a provider of waste management and product recovery services to the petroleum and petrochemical industries.

Frank Iezzi, the current CEO of STC Industrial has been named Chief Executive Officer of CIRCON Environmental; and Brandon Velek, the CEO of Intergulf, assumes the role of Board Chairman.  “These companies are 100 percent complementary,” said Mr. Iezzi. “Merging them into CIRCON Environmental results in synergies for customers in every aspect of our business.”

STC Industrial, acquired by Kinderhook in July 2015, is a provider of waste removal, transportation, and disposal services to domestic refinery companies and corporate waste generators. STC is headquartered in Sumter, SC (www.stcindustrial.com).

Intergulf Corporation, acquired by Kinderhook in December 2017, procures, transports, blends, treats, and processes petroleum and petrochemical waste streams to repurpose those materials as alternative fuel products. Intergulf is headquartered near Houston in LaPorte, TX (www.intergulfcorp.com).

According to Kinderhook, the merger of STC and Intergulf will result in a broader range of services, a greater capacity to apply high-tech and novel processes, a geographic reach into all major US refining centers, and a greater ability to help customers achieve their sustainability goals by repurposing both non-hazardous and hazardous waste as alternate fuel products.

With the merger completed, CIRCON Environmental (www.circonenviro.com) now operates from nine facilities, most in the Gulf Coast petrochemical market, and will be headquartered in LaPorte, TX. The company has almost 400 employees and $170 million in annual revenues. “CIRCON Environmental gives us a chance to align with an expanding market,” added Mr. Iezzi. “We’ll be able to reach more than 90 percent of the 13,500 chemical plants in the US and stay on pace with our petroleum partners whose domestic production has risen by more than 60 percent since 2013.”

“CIRCON Environmental brings together two industry leaders,” said Rob Michalik, a managing director at Kinderhook. “When we looked at the increase in capabilities and capacity coupled with the demands of a rapidly changing market, we realized the potential for growth a merger would create.”

Kinderhook makes control investments in companies with transaction values of $25 million to $150 million in which the firm can achieve financial, operational and growth improvements. The firm makes investments in non-core divisions of public companies, management buyouts of entrepreneurial-owned businesses, troubled situations, and existing small-capitalization companies lacking institutional support. Sectors of interest include healthcare services, environmental/business services, and automotive/light manufacturing. Kinderhook was founded in 2003 and is based in New York (www.kinderhook.com).

According to a source familiar with this transaction, Twin Brook Capital Partners, the middle-market direct lending subsidiary of Angelo Gordon, served as administrative agent on a $76.8 million financing to support the merger. Twin Brook targets senior financing opportunities up to $200 million, with hold sizes across the platform ranging from $25 million up to $150 million. Twin Brook also makes opportunistic investments in second lien, mezzanine, and equity co-investments. Last month, Angelo Gordon closed AG Direct Lending Fund III LP with $2.75 billion in equity commitments. The new fund, which is managed by Twin Brook, closed above its $2 billion target and is the firm’s largest direct lending fund to date.

© 2019 Private Equity Professional | July 9, 2019

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