The assets were purchased by Potomac Supply, LLC, a new company formed by American Industrial Partners (AIP) which is capitalized entirely with equity and has no debt. The transaction marks the AIP’s fifth platform investment in 2012 and the sixth investment in the building products industry over the last 18 months.
Potomac operates a 679,000 square foot yellow pine sawmill with 75 million board feet of capacity on a two shift operating basis and sells dimensional lumber in kiln dried and treated form. The company also sells landscaping timbers and other specialty products such as wood fuel pellets, shavings, fencing components and pallets. Potomac Supply is based in Kinsale, VA which is located 70 miles northeast of Richmond (www.potomacsupply.com).
“Although the company’s operations have been challenged in recent years, its facilities are modern and competitive,” said Rick Hoffman of AIP. “Potomac is an ideal platform for our thesis in softwoods and wood treating and we look forward to working with management to drive growth and margin improvement.”
American Industrial Partners seeks to acquire control positions in North American headquartered industrial companies with sales ranging from $100 million to $500 million. The firm was founded in 1989 and is currently managing more than $1.1 billion in equity capital. American Industrial Partners is based in New York (www.aipartners.com).
“I am extremely pleased to be partnering with the AIP. We share the commitment to build on Potomac’s strong history in the building products industry and deliver expanded capabilities and value to our customers,” said Darrell Keeling, CEO of Potomac. “It is a good day when we can support the community by giving an institution like Potomac a new future.”
© 2012 PEPD • Private Equity’s Leading News Magazine • 12-20-12