May River Buys PaperTech with Twin Brook Backing

May River Buys PaperTech with Twin Brook Backing

PaperTech, a manufacturer of paperboard packaging products, has been acquired by May River Capital.

PaperTech’s products include dual-ovenable paperboard trays and bowls. Dual-ovenable products can withstand high heat applications and are bakeable in either a conventional or microwave oven without melting or de-forming. PaperTech produces over 500 million trays and bowls annually that are used by food manufacturers, contract food packagers, foodservice operators, commercial bakeries, quick-serve restaurants and “take-and-bake” pizza companies.The company’s custom and stock thermoformed products range in size from dessert cups to large pizza trays and are made with 90% or greater renewable and sustainable materials including SBS (solid bleached substrate – the highest quality and most expensive paperboard substrate) or SUS (solid unbleached substrate).

PaperTech, with more than 200 employees, is headquartered near Detroit in Bingham Farms, Michigan and has its production facility in Findlay, Ohio. The company was founded in 1999 by Larry Epstein and Al Fotheringham. Mr. Epstein is retiring from the company but remains as a shareholder, and Mr. Fotheringham will continue with the company as both a shareholder and as its Chief Development Officer.

“Larry and I are extremely excited about the next phase of growth for PaperTech,” said Mr. Fotheringham. “After extensive evaluation, we are pleased to be partnering with May River, given their focus on doing the right thing every day for employees and customers. We value May River’s unique operational mindset and believe its leadership team will bring meaningful expertise and resources to capitalize on PaperTech’s outstanding growth opportunities.”

At closing, Jim Morgan, an experienced paper and packaging products executive and a member of May River’s executive resource group, has been named as PaperTech’s new chief executive officer. “Thanks to Larry and Al’s 20-plus years of leadership and PaperTech’s highly skilled employees, the company has earned a fantastic reputation in the marketplace. We are excited to build upon PaperTech’s legacy while continuing to provide outstanding service and quality to our long-standing customers,” said Mr. Morgan.

Chicago-based May River invests from $15 million to $40 million of equity in companies with enterprise values of $15 million to $75 million. Sectors of interest include precision manufacturing, engineered products and instrumentation, specialized industrial services, and value-added industrial distribution services. May River was founded in February 2012 and closed its inaugural fund, May River Fund I LP, in March 2017 with total commitments of $170 million.

Twin Brook Capital Partners, as administrative agent, provided debt financing to back May River’s buy of PaperTech. 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.

Birmingham, Michigan-based Amherst Partners was the financial advisor to PaperTech.

Private Equity Professional | December 16, 2020

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