MVC Capital has signed an agreement to sell its portfolio company Summit Research Labs, a specialty chemical company, to One Rock Capital Partners. The transaction is expected to close by March 31, 2013. Lazard Middle Market served as financial advisor to Summit Research Labs on this transaction.
This transaction does not include the assets of Summit Custom Spray Drying (“SCSD”) which will be purchased separately by MVC and other existing Summit shareholders. SCSD provides custom spray drying products to the food, pharmaceutical, nutraceutical, flavor and fragrance industries. SCSD will operate as a stand-alone business following the closing of the Summit sale.
Assuming full realization of the closing conditions and the sale of SCSD, MVC Capital would receive gross proceeds from its equity investment of approximately $63 million resulting in an estimated gross IRR of 31% since August 2006 (the time of the original investment). As part of the sale, MVC will provide Summit with a $22 million second lien loan.
Summit Research Labs is a specialty chemical company that manufactures antiperspirant actives — chemical ingredients that give antiperspirants their sweat-blocking ability – that are sold to large consumer products and personal care products companies. Summit Research Labs is based in Huguenot, NY (www.summitreheis.com).
“We are pleased to have reached an agreement to monetize our investment in Summit, expected to result in a realized gain of approximately $47 million. This gain is in addition to the $12 million special dividend MVC received from Summit in 2012, adding to the overall return of this investment and highlighting our ability to build shareholder value,” said Michael Tokarz, Chairman and Portfolio Manager of MVC.
MVC invests from $3 million to $25 million in middle market companies that have revenues of $10 million to $200 million and EBITDAs of $3 million to $25 million. Sectors of interest include but are not limited to consumer products; industrial manufacturing and services; food and food services; financial services; value-added distribution; and specialty chemicals. MVC is traded on the NYSE under the symbol MVC. The company is based Purchase, NY (www.mvccapital.com).
One Rock makes equity investments of $10 million to $50 million in companies operating in the chemicals, industrial and consumer durables, business services, environmental services, healthcare products, and automotive retail sectors. The firm is based in New York (www.onerockcapital.com).
“We have enjoyed working with Summit’s highly skilled management team to build the company into a leading global manufacturer of antiperspirant actives, and we look forward to continuing to support the success of the team as a lender under One Rock ownership,” said Shivani Khurana, Director of Summit and Managing Director of TTGA, investment adviser to MVC Capital.
© 2013 PEPD • Private Equity’s Leading News Magazine • 2-13-13