Financing

Monroe Capital has sponsored its third special purpose acquisition company since 2018 with the launch of MCAP Acquisition Corporation.

Monroe’s MCAP will look to combine with any business that is active in any industry or sector, but it has a specific interest in software, technology-enabled, and business services companies. MCAP priced its initial public offering of 27,500,000 units at a price of $10.00 and it began trading on the NASDAQ under the symbol MACQU on February 26, 2021.

MCAP is the third SPAC that Monroe has participated in as a sponsor investor. In 2018, Monroe co-sponsored Thunder Bridge Acquisition and supported its later combination with Repay Holdings (NASDAQ: RPAY), a Georgia-based provider of financial technology and payment processing services. In 2019, Monroe co-sponsored Thunder Bridge Acquisition II, which in December 2020 agreed to merge with Indie Semiconductor, a California-based supplier of sensors used in driver assistance systems (including LiDAR) for electric and autonomous vehicles. The merger with Indie is expected to be completed in early Spring 2021.

MCAP is led by CEO and Chairman Theodore Koenig, who is the founder and CEO of Monroe Capital.

“We are excited to offer a SPAC as another vehicle for Monroe’s investment platform,” said Mr. Koenig. “It will offer a different and compelling way for our clients to go public versus a traditional IPO. The SPAC will offer non-control, minority investment for a company looking to fund growth and acquisitions.”

Monroe Capital (NASDAQ: MRCC) is an active provider of senior and junior debt financing to middle-market businesses, special situation borrowers and private equity sponsors. Investment types include unitranche financings; cash flow, asset-based and enterprise value-based loans; and equity co-investments. The firm was founded in 2004 and is headquartered in Chicago with additional offices in Atlanta, Boston, Los Angeles, New York, and San Francisco.

© 2021 Private Equity Professional | March 2, 2021

Lower middle-market lender Tree Line Capital Partners has backed Longshore Capital Partners’ acquisition of Gen3 Marketing from LaSalle Capital.

Gen3 is a provider of digital marketing services, including pay-per-click, search engine optimization, and social media. The company was founded in 2007 and is headquartered near Philadelphia in Blue Bell, Pennsylvania.

Longshore was formed in 2020 by LaSalle Capital professionals Ryan Anthony and Nicholas Christopher and closed its debut fund, Longshore Capital Fund I LP, with capital commitments of $203 million last August. In tandem with the closing of the new fund, Longshore acquired a controlling interest in Gen3 Marketing and four other business services companies from LaSalle (LaSalle acquired Gen3 in December 2017).

Tree Line provided a first lien credit facility to support Longshore’s buy of Gen3. “We have enjoyed building a lasting relationship with the Tree Line team and chose to work with Tree Line given the certainty to close they provided through an uncertain COVID-19 deal environment,” said Mr. Anthony. “Gen3 was one of the first platform investments in our inaugural Longshore fund and certainty to close was paramount. Tree Line moved quickly and spoke with confidence.”

“This transaction is a great example of our relationship-driven approach to direct lending,” said Stephan Schneck, a senior vice president of Tree Line. “Having completed past transactions with the Longshore team, we were able to leverage existing documentation and streamline the closing process. We recognize the value generated from buy and build strategies and are well equipped to execute these deals over a long relationship given our significant follow-on capital capacity.”

Tree Line provides first lien term loans, unitranche term loans, and equity co-investments to North America-based lower middle market companies that have EBITDA from $3 million to $30 million and transaction sizes up to $150 million. The firm has extensive direct lending experience – it has completed more than 110 transactions – across multiple economic cycles and has generated significant repeat investment opportunities from private equity sponsors. Tree Line is headquartered in San Francisco with additional offices in New York City, Los Angeles, and Austin.

Chicago-headquartered Longshore makes control investments in North America-based companies with $5 million to $15 million of EBITDA. Sectors of interest include business process outsourcing, revenue cycle management, and managed services and payments.

© 2020 Private Equity Professional | November 2, 2020

Tree Line Capital Partners and CVC Credit Partners have provided an increase to their existing credit facility to Ingenio, a portfolio company of Alpine Investors.

With the new increase, used to support an add-on acquisition which closed in August, the Tree Line /CVC Credit facility with Ingenio now totals $127 million. Tree Line was the Administrative Agent and Lead Arranger on the transaction.

Ingenio is an online platform that connects advice-seekers with coaches and advisors. Since founding, the Ingenio platform has enabled over 40 million phone, chat, and web-based personal advice conversations.

The company’s brands include Keen.com (personal advice); PsychicCenter.com (a community of astrologers, tarot readers, and clairvoyants); LiveAdvice.com (life-coaching, relationship coaching, and career advice); Ether.com (provides phone and email monetization tools to advice providers); Horoscope.com, Astrology.com, Horoscopo.com and AstroCenter.com (free horoscopes, paid astrological reports, games, and content).

Ingenio was founded in 1999 and was acquired by AT&T in 2007. It was acquired by Alpine from AT&T in May 2013, and in July 2015 Ingenio completed the add-on acquisition of Horoscope.com. The company, led by CEO Warren Heffelfinger, is headquartered in San Francisco.

“We have enjoyed building a lasting relationship with the Tree Line and CVC Credit teams across several transactions,” said Mr. Heffelfinger. “They have reliably answered the call when it has come to additional capacity for add-on acquisitions coupled with a creative approach to tailoring debt structures to a transaction’s requirements.”

“We have been extremely pleased with Ingenio’s strong performance and the long-term partnership we’ve built since 2015,” said Frank Cupido, a partner at Tree Line. “Our relationship with Ingenio is a great example of our ability to grow with a borrower from initial platform acquisition through various stages of growth and capital needs, including acquisitions, recapitalizations and other flexible financings.  Warren and the team have built a best-in-class organization and we look forward to working with them in the years ahead.”

Tree Line provides first lien term loans, unitranche term loans, and equity co-investments to North America-based lower middle market companies that have EBITDA from $3 million to $30 million and transaction sizes up to $150 million. The firm has extensive direct lending experience – it has completed more than 110 transactions – across multiple economic cycles and has generated significant repeat investment opportunities from private equity sponsors. Tree Line is headquartered in San Francisco with additional offices in New York City, Los Angeles, and Austin.

CVC Credit Partners, the credit strategy arm of private equity firm CVC, invests in senior secured loans to middle-market companies that have EBITDA from $10 million to $40 million. The credit group has offices in New York City and London and manages $26 billion of assets.

San Francisco-based Alpine invests in control buyouts, majority recapitalizations, and corporate carve-outs of recurring revenue software and services businesses, with enterprise values from $5 million to $400 million and EBITDA of $1 million to $40 million. In November 2019, the firm held a hard cap close of Alpine Investors VII LP with $1 billion in limited partner capital commitments. The new fund was oversubscribed and handily beat its original target of $750 million.

Private Equity Professional | October 2, 2020

Monroe Capital provided financing for last month’s buy of GPI Prototype & Manufacturing by Midwest Composite Technologies (MCT), a portfolio company of CORE Industrial Partners.

Monroe is an active provider of senior and junior debt financing to middle-market businesses, special situation borrowers and private equity sponsors. Investment types include unitranche financings; cash flow, asset-based and enterprise value based loans; and equity co-investments. The firm is a frequent provider of debt to CORE for its industrial acquisitions, and it provided an increase to an existing debt facility which was used to finance CORE’s original buy of Wisconsin-based MCT in September 2018.

CORE has been actively assembling a 3D prototyping and low-volume production services platform since acquiring MCT. The company’s technical capabilities include laser sintering, poly-jet printing, stereolithography, multi-jet fusion technologies, CNC machining, and injection molding. Customers of MCT are active in the medical, aerospace, research & development, consumer, and industrial end markets.

Companies like MCT are part of “Industry 4.0” which refers to the current trend of automation and data exchange in manufacturing technologies. The goal of Industry 4.0 is the creation of “smart factories” that utilize cyber-physical systems, the Internet of things, cloud computing and cognitive computing. Industry 4.0 is commonly referred to as the fourth industrial revolution.

In December 2019, MCT acquired ICOMold, an Ohio-based custom plastic injection molder and a provider of CNC machining services. A second add-on was closed by MCT in September 2019 with the buy of FATHOM, a California-based manufacturer with an expertise in 3D printing and additive manufacturing.

GPI Prototype & Manufacturing, MCT’s latest add-on, uses direct metal laser sintering (DMLS) – a process that employs a high powered laser to melt and fuse metallic powders together – to print parts with complex geometries for on-demand manufacturing applications. The company has capabilities with a range of metal powders, including aluminum, steel and stainless steel, titanium, Inconel (a nickel-chromium-based alloy) and cobalt chrome.

Customers of GPI include numerous Fortune 500 companies operating in the medical, aerospace and defense sectors. The company, led by President Adam Galloway, was founded in 2007 and is headquartered north of Chicago in Lake Bluff, Illinois.

With MCT’s buy of GPI, CORE has placed all four of its Industry 4.0 companies – MCT, ICOMold, FATHOM and GPI – under the FATHOM brand. The combined company now has 100 large-platform industrial-grade 3D printing machines and a national footprint with over 200,000 square feet of manufacturing capacity across five facilities.

Monroe Capital (NASDAQ: MRCC) was founded in 2004 and is headquartered in Chicago with additional offices in Atlanta, Boston, Los Angeles, New York, and San Francisco.

Chicago-based CORE makes control investments in companies that have revenues of up to $200 million, EBITDA of up to $20 million, and enterprise values up to $150 million.

Private Equity Professional | September 3, 2020

Innovative Office Products, a portfolio company of Cathay Capital Private Equity, has acquired SiS Ergo with backing from TCF Capital Funding. TCF provided just over $80 million of secured financing and was the sole lead arranger and administrative agent.

Innovative Office Products (IOP) is a designer and manufacturer of ergonomic products including monitor, tablet, sit-stand mounting systems, and height-adjustable desks that are used in office, healthcare, and other specialty workspaces.

IOP was acquired by Cathay in January 2018. In June 2018, IOP acquired San Jose, California-based HAT Contract, a designer, contract manufacturer and distributor of open space office products including height-adjustable tables, power and data beams, drawer pedestals, dividers and electrical components for benching and bases.

The buy of SiS Ergo adds a new brand to IOP’s other company-owned brands including Innovative, HAT Contract, Ergotech, and CompuCaddy.

IOP, founded in 1986, and has over 200 employees working in the US with a headquarters located 77 miles north of Philadelphia in Easton, Pennsylvania.

SiS Ergo is a manufacturer of electric and non-electric height-adjustable tables with Danish-inspired modern and minimalistic aesthetics. The company was founded in 1966 and introduced the first height adjustable desk in 1970. SiS Ergo is headquartered in Rudkøbing, Denmark and has an additional facility in Londonderry, New Hampshire.

“Innovative, HAT, and SiS Ergo have built strong brands by providing quality ergonomic solutions across many markets,” said Kevin Nowak, senior vice president at TCF Capital Funding. “We are excited to provide additional financing to support Cathay Capital’s and Innovative’s strategic plan through the acquisition of Sis Ergo. SiS Ergo’s customized product solutions enhances Innovative’s suite of product solutions and we believe this partnership will result in the company’s accelerated global expansion.”

TCF Capital Funding is a provider of cash flow-based loans to lower middle-market businesses that have from $10 million to $150 million in revenue and from $2 million and $15 million in EBITDA. TCF Capital Funding actively supports private equity sponsors and family offices in their acquisition or recapitalization of these lower middle-market companies.

In addition to Cathay Capital, the shareholders of IOP include members of its senior management team, Norwest Mezzanine Partners, and ORIX Private Equity.

Cathay Capital was founded in 2007 and has completed over 140 buyouts, growth and venture capital investments and manages more than $3.8 billion of assets. The firm invests from $25 million to $75 million in control and minority positions. Sectors of interest include consumer products and services, business and digital services, healthcare, and advanced manufacturing sectors.

In May 2020, Cathay Capital closed its latest fund, Cathay Capital Midcap II LP, with $850 million of capital. Midcap II is the firm’s largest fund to date and an increase of $325 million over its Midcap I fund, which closed in 2014.

Cathay Capital has more than 100 employees with offices in Paris, Shanghai, Beijing, New York, San Francisco, Munich, Tel Aviv, and Singapore.

Private Equity Professional | August 21, 2020

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