Kinderhook Acquires Copperweld from THL Credit

Kinderhook Industries has acquired Copperweld Bimetallics, a supplier of bimetallic wiring products, from THL Credit.

Copperweld is the world’s largest manufacturer of bimetallic conductors and is the only domestic producer of copper-clad steel (CCS) and copper-clad aluminum (CCA) wire. The company’s products have greater durability, are lower weight, and have cost advantages over traditional copper wiring products.

Historically a supplier of bimetallic wire to the telecommunications industry, Copperweld has expanded into new markets in recent years, supplying CCS and CCA wire to the automotive, power grid, building wire and specialty wire sectors. In particular, the electrification of vehicles is expected to rapidly grow the copper content in vehicles, causing OEM’s to search for lighter and cheaper materials, a trend Copperweld expects to benefit from.

Copperweld’s revenues in 2018 were $92 million with a gross profit of $14 million and EBITDA of just under $9 million. Company-owned brand names include Copperweld (copper-clad steel wire) and Copperlite (copper-clad aluminum wire). Copperweld, led by CEO Craig York, was founded in 1915 and is headquartered in Fayetteville, TN (www.copperweld.com).

“Kinderhook is an ideal partner for Copperweld and shares our vision for the future growth of the company,” said Mr. York. “We are all very excited about the next chapter as we continue to broaden our customer base, expand our capabilities and prove the superiority of our products in a wide range of applications.”

“Copperweld’s proprietary manufacturing and differentiated products provide the company with an array of compelling growth avenues to pursue, particularly in the automotive arena where the advent of electric vehicles is pushing auto manufacturers to find lighter and cheaper wiring alternatives to copper,” said Paul Cifelli, a managing director at Kinderhook. “We are excited to welcome Copperweld to the Kinderhook portfolio and look forward to building the business in partnership with Craig and his team.”

Twin Brook Capital Partners, the middle-market direct lending arm of Angelo Gordon, served as the administrative agent on $39 million of debt financing to support the transaction. Chicago-based Twin Brook focuses 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. The firm targets senior financing opportunities up to $200 million, with hold sizes across the platform ranging from $25 million up to $150 million. Twin Brook’s products include opportunistic investments in second lien, mezzanine, and equity co-investments.

“Craig and his team have done an outstanding job positioning the business to penetrate numerous attractive untapped specialty end markets,” said Nate Druckenmiller, a vice president at Kinderhook. “We are thrilled to have the opportunity to work with Copperweld and to accelerate its recent growth trajectory as it continues to diversify its sector focus and differentiated offerings.”

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 is headquartered in New York (www.kinderhook.com).

Boston-headquartered THL Credit (NASDAQ: TCRD), the seller of Copperweld, was founded in 2007 as a credit affiliate of Thomas H. Lee Partners and has $16.8 billion of assets under management.

© 2019 Private Equity Professional | October 3, 2019

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