Yukon Partners was the provider of mezzanine debt to back Industrial Opportunity Partners’ recent buy of Midwest Recycled and Coated Containerboard Mill (DBA Midwest Paper).
Midwest Paper manufactures and distributes various grades of paper including recycled containerboard (medium and linerboard) for corrugated packaging, recycled bag products, and white paper for book publishing and printing/writing applications.
Midwest Paper looks to be a successful turnaround story. The company was founded in 1889 and is headquartered southwest of Green Bay in Combined Locks, Wisconsin. In 2014, the underperforming paper mill was slated for closing by its owner, French paper company Sequana.
Undeterred, ten members of the mill’s management team formed a new company, Appleton Coated, and acquired the mill. However, profitable operations of the mill continued to be elusive and in September 2017, Appleton Coated’s lender, PNC Bank, sent it into receivership, leading to the mill’s shutdown and the layoff of its 600 employees. In October 2017, the mill was sold to Industrial Assets and Maynard Industries, two industrial auction and liquidation firms. Remarkably, after just 60 days without a buyer for the assets of the mill, the management team of Appleton Coated convinced the liquidators to run the business under a turnaround strategy that focused on brown papers – recycled containerboard for corrugated packaging – and Midwest Paper was born.
Today, the company is profitable with all three of its paper machines (two on brown paper, one on white paper) in operation, and the company has an annual production capacity of 400,000 tons and has rehired more than 320 of its employees.
“We are excited to partner with IOP and the Midwest Paper team,” said Michael Hall, a managing partner of Yukon. “Midwest Paper’s broad production capabilities and strong customer relationships position the company to capitalize on numerous growth opportunities. IOP’s operationally-focused strategy will enable Midwest Paper to continue to enhance its operations and better serve its customer base.”
Yukon Partners makes subordinated debt and equity investments of $10 million to $50 million in middle-market, private equity sponsored business transactions including buyouts, growth and platform strategies, recapitalizations, mergers and acquisitions, and public-to-private buyouts. Yukon Partners has offices in Minneapolis and Boston.
Since its inception in 2008, Yukon has raised over $1.2 billion in capital across its three funds. The firm’s third fund, Yukon Capital Partners III LP (and associated funds), closed in November 2017 at its hard cap of $559 million.
IOP focuses on acquiring middle-market manufacturing and value-added distribution businesses, typically with revenues between $30 million and $400 million. The firm targets businesses with strong product, customer, and market positions and provides both management and operational resources to support sales growth and operational improvements. IOP is headquartered in the Chicago suburb of Evanston.
© 2020 Private Equity Professional | January 17, 2020