Financing

Abacus Finance Group was the administrative agent and lead arranger for $15 million in senior secured credit facilities to support the recapitalization of Specialty Appliances by Five Points Capital. Abacus also made an equity co-investment in Specialty Appliances.

Specialty Appliances is a designer and manufacturer of more than 100 types of customized orthodontic appliances.

The company’s principal product lines are Herbst appliances, used most often to correct overbites in growing children; Digital Indirect Bonding Services, which increase an orthodontist’s accuracy when applying traditional braces; Clear Image Aligners, used for easy-to-moderate orthodontic corrections; and a range of other customized fixed metal, fixed expansion, and molar distalization appliances (used to move molars). Specialty Appliances was founded in 1981 by CEO Scott Huge and is headquartered northeast of Atlanta in Cumming, Georgia.

“This was our first transaction with Abacus, and we were impressed how smoothly, efficiently, and on time the whole process went,” said Marshall White, a partner at Five Points.

Abacus Finance provides cash flow-based senior financing to private equity and family office-sponsored, lower-middle market companies that have EBITDA between $3 million and $15 million. Debt facilities can be as large as $50 million with a typical hold size ranging from $10 million to $40 million

“Although, as Marshall noted, it was our initial transaction with Five Points, we have known members of the firm for many years. As I expected, they proved to be an excellent partner and easy to work with,” said Tim Clifford, president and CEO of Abacus. Other Abacus team members involved in the buy of Specialty Appliances included Director Eric Petersen and Analyst Austin Rendell.

“Five Points’ level of due diligence was impressive and made our underwriting and documentation flow smoothly,” said Mr. Petersen, “and were able to act quickly – an important aspect of being able to Count on Us™ thanks to our Total Partnership Approach™.” The firm’s Total Partnership Approach refers its focus on relationships not just transactions and includes its cash-flow financing expertise, deep industry knowledge, and a commitment to exceptional client service, including swift response times, over the lifecycle of each investment.

Five Points Capital (formerly known as BB&T Capital Partners) invests from $5 million to $25 million of equity and subordinated debt in lower middle market companies that have EBITDA of $3 million or greater. The firm’s transaction types include buyout, acquisition, growth, and recapitalization transactions as a control investor on a standalone basis, or as a co-investor with other financial sponsors.  Sectors of interest include business, healthcare and industrial services; niche manufacturing; and value-added distribution. Five Points is headquartered in Winston-Salem, North Carolina.

“The Abacus team was responsive, flexible, easy to work with, and knew the company,” added Steele Windle, a vice president at Five Points.

Since its founding in June 2011, Abacus has closed over $2 billion in financings. The firm is headquartered in New York and is an affiliate of New York Private Bank & Trust.

© 2020 Private Equity Professional | January 15, 2020

Twin Brook Capital Partners, the middle-market direct lending subsidiary of Angelo Gordon, today announced that it has committed over $3.3 billion to private equity sponsors in support of healthcare transactions, including over $1.3 billion last year alone.

In 2019, Twin Brook closed 24 healthcare transactions across 14 subsectors, bringing the firm’s total number of healthcare transactions closed to more than 80 since its inception in the fourth quarter of 2014. Twin Brook served as lead agent on all the healthcare transactions it supported in 2019, which included 14 new platform financings and 10 add-on financings.

“We achieved increased momentum in 2019, putting over $1.3 billion to work in support of our private equity clients’ investments across a broad range of healthcare subsectors,” said Faraaz Kamran, a senior partner at Twin Brook who focuses on the firm’s healthcare lending business. “In addition, we successfully closed our twentieth physician practice management platform and further enhanced our team’s healthcare expertise with the addition of Tim Wentink. Our private equity sponsor clients continue to be very active in this space, and we look forward to providing the capital needed to support their transactions in 2020 and beyond.”

Mr. Kamran joined Twin Brook in January 2016 after spending more than eight years at Madison Capital where he led the firm’s healthcare leveraged finance team. Similarly, Mr. Wentink joined Twin Brook in April 2019 after spending more than eleven years at Madison Capital, where he was a managing director on its healthcare leveraged finance team.

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 $400 million with hold sizes across the Twin Brook platform ranging from $25 million up to $150 million. Since founding in the fourth quarter of 2014, Twin Brook has closed over 425 transactions and provided total arranged commitments of approximately $12.5 billion.

Angelo, Gordon & Co., Twin Brook’s parent company, is an alternative investor with a focus on credit, real estate, private equity, and other strategies. The firm, founded in November 1988, currently manages approximately $36 billion in capital and has over 500 employees, including 200 investment professionals. Angelo Gordon is headquartered in New York City with additional offices across the US, Europe and Asia.

In June 2019, Angelo, Gordon & Co. closed AG Direct Lending Fund III LP with $2.75 billion in equity commitments. The new fund, which is managed by Twin Brook, closed above its $2 billion target and is the firm’s largest direct lending fund to date. Twin Brook’s earlier fund, AG Direct Lending Fund II LP, closed in 2017 with a total of $2.3 billion in equity capital.

© 2020 Private Equity Professional | January 9, 2020

Varagon Capital Partners, a lender to middle-market companies, has entered into a new partnership agreement with Aflac Global Investments and has extended its existing partnership agreement with American International Group (AIG).

Varagon was formed in June 2014, backed by AIG and certain partners and affiliates of Oak Hill Capital Management as a direct lender to middle-market companies, and launched at that time with a $1.5 billion investment commitment from AIG.

Varagon provides debt financing to middle-market companies that have from $10 million to $75 million of EBITDA. Product types include revolving credit facilities, first-lien and senior debt, unitranche and senior stretch, second-lien loans, junior capital and mezzanine debt. The firm has a hold size of up to $400 million and invests across a wide range of industries.

Today, it was announced that Varagon provided a senior secured credit facility to Easy Ice to support its acquisition by Freeman Spogli. Varagon served as Administrative Agent and Joint Lead Arranger on this transaction. Easy Ice, co-headquartered in Phoenix, Arizona and Marquette, Michigan, is an outsourced provider of commercial ice machines and offers a national subscription service that includes installation, cleaning, preventive maintenance, repairs, backup ice, and peak demand ice. Easy Ice services more than 25,000 ice makers across 47 states.

Another recently closed transaction by Varagon was a senior secured credit facility to AIM MRO to support its acquisition by AE Industrial Partners. Varagon served as the Administrative Agent, Lead Arranger and Bookrunner on this transaction. AIM MRO is a Miamiville, Ohio-based manufacturer and supply chain manager of repair products and materials used primarily in the aerospace engine aftermarket.

Since founding in 2014, Varagon has made over $14.5 billion of financing commitments to over 180 companies. The firm is headquartered in New York City with additional offices in Fort Worth and Chicago.

Varagon is led by CEO Walter Owens and it will continue to operate as an independent company with no changes to its strategy, investment philosophy, management team, or day-to-day operations. Mr. Owens, prior to joining Varagon at its formation, previously held leadership positions at GE Capital, CIT Group, and TD Bank.

“We are excited to welcome Aflac as a new partner and to continue our strategic relationship with AIG,” said Mr. Owens. “These long-term commitments from two world-class insurers provide access to substantial capital, enhance Varagon’s capabilities to serve investors and borrowers, and accelerate the execution of our strategic growth objectives. We appreciate Aflac’s recognition of Varagon’s capabilities as a leading middle-market asset manager and we look forward to a successful partnership.”

According to the terms of the new partnership agreement, Aflac will make a multi-year investment commitment of up to $3 billion to Varagon to invest in middle-market loans and Aflac is acquiring the equity interests in Varagon currently held by current and former partners and affiliates of Oak Hill. The transaction will not reduce the ownership of Varagon held by its management team or AIG, and upon closing (expected by the end of the first quarter) Aflac and AIG will hold equal noncontrolling minority ownership stakes in Varagon.

“Middle-market credit is a strategically important asset class for Aflac, and we are excited to partner with Varagon,” said Eric Kirsch, executive vice president of Aflac. “Varagon’s rigorous investment underwriting process and proven origination capabilities directly align with Aflac’s strategy of partnering with high-quality asset managers.”

Aflac Global Investments is an asset management subsidiary of Aflac Incorporated (NYSE: AFL), an American insurance company and the largest provider of supplemental insurance in the United States. The company was founded in 1955 and is headquartered 100 miles south of Atlanta in Columbus, Georgia. Aflac Global Investments manages more than $120 billion in assets and has 125 investment and support professionals who work at its offices in New York City and Tokyo.

“As a long-term investor with a focus on credit discipline, we see an attractive opportunity in middle market credit and are pleased to continue our partnership with the Varagon team,” said Geoffrey Cornell, deputy chief investment officer of AIG Investments. “We are proud to have been an early backer of Varagon and we are looking forward to Aflac joining our strategic partnership to jointly support Varagon’s continued growth.”

American International Group (NYSE: AIG) is an American multinational finance and insurance corporation with operations in more than 80 countries. The firm is headquartered in New York City and has more than 56,000 employees.

Wells Fargo Securities was the financial advisor to Varagon and Rothschild & Co was the financial advisor to Aflac.

© 2020 Private Equity Professional | January 9, 2020

Abacus Finance Group was the administrative agent and sole lender for senior secured credit facilities that backed the recent buy of Kason Corporation by May River Capital.

To complete the buy of Kason, May River formed Advanced Material Processing, a new platform company that combines Kason with May River’s existing portfolio company, Marion Process Solutions.

Kason manufactures equipment used to separate materials from solids and slurries including circular vibratory screeners and centrifugal screeners. The company also makes a line of fluid-bed processors that are used for the drying, cooling, or moisturizing of bulk solids.

Kason’s products are used in a range of industries including food, pharmaceutical, chemical, plastic, energy, minerals, aerospace and defense. The company, led by CEO Henry Alamzad, was founded in 1967 and is headquartered in Milburn, NJ with additional offices in Canada and the UK.

Marion manufactures food, chemical, plastic, and mineral mixers and blenders, as well as microwave vacuum drying systems that are used in the food, nutraceutical, mineral, plastic, chemical, and biomass industries. The company, led by CEO Lee Eilers, was founded in 1938 and is headquartered in Marion, IA.

“The transaction was handled smoothly and rapidly from the outset,” said Chip Grace, a partner at May River. “We were impressed that the Abacus team knew both the material processing sector and the company. They were responsive, efficient, easy to work, and delivered on time as promised.”

Abacus provides cash flow-based senior financing to private equity-sponsored, lower-middle market companies that have EBITDA between $3 million and $15 million. Debt facilities can be as large as $50 million with a typical hold size ranging from $10 million to $40 million.

“This was our first transaction with May River,” said Tim Clifford, president and CEO of Abacus, “and we were pleased that they worked so well with us during what was a very smooth due diligence process.”

“They were an excellent team to work with,” added Eric Petersen, a director with Abacus, “and made our underwriting and documentation easy. Therefore, we were able to move quickly – an important aspect of Making Life Easier™ through our Total Partnership Approach™.” The firm’s Total Partnership Approach refers its focus on relationships not just transactions and includes its cash-flow financing expertise, deep industry knowledge, and a commitment to exceptional client service, including swift response times, over the lifecycle of each investment.

Other Abacus team members involved in this transaction were Senior Associate Joe Lee and Analyst Austin Rendell. Since its inception in June 2011, Abacus has closed over $2 billion in financings. Abacus is headquartered in New York and is an affiliate of New York Private Bank & Trust (www.abacusfinance.com).

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, specialized industrial services, and value-added industrial distribution. 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.

© 2019 Private Equity Professional | September 10, 2019

Tree Line Capital Partners, a direct lender focused on the lower middle market, has provided a first-lien term loan and revolver, and made equity co-investment to support O2 Investment Partners’ recent investment in Frontier Dental Laboratories, a maker of dental prosthetics.

Frontier Dental is a full service, multi-site dental laboratory that provides high-end dental prosthetics, removable dental products and implants primarily for the cosmetic dentistry industry. The company’s products include full arch and multi-unit anterior crowns and bridges, veneers, single and multi-posterior crown and bridges, as well as single unit and full mouth implants.

Frontier has more than 500 customers, primarily private practices, and is led by President Brent West, and VP of Sales and Marketing Gil Villavecer. The company operates through two dental laboratories in El Dorado Hills, CA and Vancouver, BC (www.frontierdentallab.com).

“We appreciate Tree Line’s support in building the Frontier platform and are excited to expand our partnership with Tree Line with our third deal with them in thirteen months,” said Luke Plumpton, a partner at O2. “Tree Line sees what we see in Frontier, an incredible team led by Brent West and Gil Villavecer with a strong vision for growth. O2 is here to support the Frontier team and that’s Tree Line’s approach as well. We chose to work with Tree Line again not only for their proven efficient process and certainty of closing but also due to their ability to fulsomely respond to growth financing needs in the future.”

“The investment in Frontier highlights Tree Line’s ability to efficiently underwrite an initial financing for a lower middle market company, but with a platform mentality; we enjoy collaborating with our sponsors regarding forward-thinking for future financing needs, and believe O2 and Frontier are capitalizing on an exciting opportunity in building a leading dental lab platform that we can support with future debt and equity financing,” said Frank Cupido, a partner of Tree Line.

O2 and Tree Line have partnered up before, most recently in June 2019 when Tree Line backed O2’s investment in and strategic alliance with Patriot Energy Group (PEG) as an add-on investment to EMEX, a Houston-based provider of energy-related software and consulting services that O2 invested in during June 2018 with financing from Tree Line. PEG is a Burlington, MA-based client-side energy broker and advisor that assists customers in managing risks associated with energy costs. “As always, Tree Line ran a highly efficient process which was important to us given the scale of this acquisition,” said Joe Vallee, a vice president at O2. “Tree Line meaningfully expanded its credit facility and equity co-investment to facilitate EMEX’s investment in PEG. O2 is excited to continue expanding the relationship with Tree Line and fuel the growth of this highly scalable technology platform.”

“The EMEX transaction highlights Tree Line’s ability to provide initial platform financing and subsequent meaningful expansion capital for add-ons; in this case, we nearly doubled our initial investment with the company and did so efficiently given our existing framework,” said Jon Schroeder, a managing partner of Tree Line.

Tree Line is a direct lender focused on providing first lien term loans, unitranche term loans and equity co-investments to North American-based lower middle market companies with $3 million to $30 million of EBITDA and transaction sizes up to $150 million. The firm currently manages $1.2 billion in investable capital and has completed over 72 transactions for acquisitions, recapitalizations, refinancings, expansion projects and other growth capital needs. Tree Line is headquartered in San Francisco with an additional office in New York (www.treelinecp.com).

O2 makes control investments of $5 million to $75 million in companies with EBITDAs from $2 million to $10 million located anywhere in the US and Canada but prefers the Midwest and the Great Lakes regions. Sectors of interest include niche manufacturing, niche distribution, select service businesses, and certain technology businesses. In October 2017, the firm held a final closing of its Oxygen Fund with an above-target $100 million of capital commitments. O2, based in the Detroit suburb of Bloomfield Hills, is backed by the Orley family which has been investing in operating businesses and real estate since 1950 (www.o2investment.com).

© 2019 Private Equity Professional | July 30, 2019

 Tree Line Capital Partners was the lead arranger and administrative agent for an $82.3 million first lien credit facility for Ingenio, a portfolio company of Alpine Investors.

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 Investors from AT&T in May 2013 and in July 2015 Ingenio acquired Horoscope.com. The company, led by CEO Warren Heffelfinger, has 80 employees and is headquartered in San Francisco (www.ingenio.com).

“We have enjoyed building a lasting relationship with the Tree Line team over the past six years across several transactions,” said Mr. Heffelfinger. “They have always been receptive to our needs and have responded with creative structures delivered in very efficient processes.”

“We have been extremely pleased with Ingenio’s strong performance and the long-term partnership we’ve built,” said Tom Quimby, a managing partner of 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.  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 is a direct lender focused on providing first lien term loans, unitranche term loans and equity co-investments to North American-based lower middle market companies with $3 million to $30 million of EBITDA. The firm currently manages $1.2 billion in investable capital and has completed over 75 transactions for acquisitions, recapitalizations, refinancings, expansion projects and other growth capital needs. Tree Line is headquartered in San Francisco with an additional office in New York (www.treelinecp.com).

Alpine invests in US or Canadian based software and services companies that have from $1 million to $30 million of EBITDA. The firm was founded in 2001 and is based in San Francisco (www.alpine-investors.com).

© 2019 Private Equity Professional | July 8, 2019