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Generation Growth Acquires Innovative Laser

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Generation Growth Capital has acquired Innovative Laser Technologies, a maker of laser workstations used in the production of medical devices. The existing management team of the company will continue operating the business following the transaction.

Innovative Laser Technologies is a designer and fabricator of custom laser workstations used to produce components for numerous industries, including medical device, defense, energy and aerospace. Customers include medical device OEMs and many fortune 500 companies. The company is headquartered in Minneapolis (www.iltinc.com).

“ILT has solidified a niche in the custom laser workstation market and through our diligence process we learned that their customers really value the capabilities that ILT possesses,” said John Reinke, a Managing Director of Generation Growth Capital. “We plan on investing in new systems, processes and people to help manage the growth that the company is experiencing.”

Senior financing was provided by Minnesota Bank & Trust (www.mnbankandtrust.com) and mezzanine financing was provided by Exmarq Capital Partners (www.exmarqcapital.com).

“The founders of ILT did a great job of growing the company from scratch, building the solid reputation that the company enjoys in its markets today. We’re excited that they will continue to be partners with us going forward. We continue to be bullish on niche domestic manufacturing and companies that touch certain aspects of the healthcare industry,” said Cory Nettles, a Managing Director of Generation Growth Capital.

Generation Growth expects to make additional investments in the business to support future growth and implement operational best practices.

Generation Growth Capital invests from $1 million to $10 million in manufacturing, service, and distribution businesses that have enterprise values of less than $30 million and sales ranging from $5 million to $50 million. Investments are primarily structured as equity but subordinated debt and warrant structures are also considered. The firm is headquartered in Milwaukee and has an additional office in Chicago (www.generationgrowth.com).

“GGC really understands the nature of our business. They recognize the value that we bring to our customers through technical expertise, service, and support. Throughout the transaction process GGC recognized the key areas of our business and will provide needed resources to continue to professionalize our company. I look forward to working with GGC to continue ILT’s strong growth,” said Fred Tsuchiya, President and CEO of ILT.

© 2014 PEPD • Private Equity’s Leading News Magazine • 3-17-14

Sycamore Partners to Invest in Aeropostale

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Aeropostale, a mall-based specialty retailer of casual apparel for young women and men, has signed a commitment letter with Sycamore Partners and its affiliates for a strategic partnership and $150 million in senior secured credit facilities.

The senior secured credit facilities consist of a five-year $100 million term loan facility and a ten-year $50 million term loan facility that includes a sourcing arrangement with MGF Sourcing, a portfolio company of Sycamore Partners and one of the largest apparel sourcing, manufacturing, and supply chain companies in the world. Formerly part of L Brands, MGF Sourcing was acquired by Sycamore Partners in November 2011.

Aeropostale (NYSE: ARO) is a primarily mall-based, specialty retailer of casual apparel and accessories, principally targeting 14 to 17 year-old young women and men through its Aeropostale stores and 4 to 12 year-old kids through its P.S. from Aeropostale stores. The company currently operates 864 Aeropostale stores in 50 states and Puerto Rico, 78 Aeropostale stores in Canada and 151 P.S. from Aeropostale stores in 31 states and Puerto Rico. In addition, through various licensing agreements, the company operates an additional 99 Aeropostale locations and one Aeropostale and P.S. from Aeropostale store. Aeropostale is headquartered in New York (www.aeropostale.com).

Under the terms of the commitment letter, Aeropostale will also issue convertible preferred stock to Sycamore Partners. The convertible preferred stock gives Sycamore Partners the right to acquire up to 5% of the company’s common stock at an exercise price of $7.25, the closing price of the company’s common stock on March 12, 2014. Combined with Sycamore Partners’ current ownership of Aeropostale’s outstanding common stock, Sycamore Partners’ ownership on an as-converted basis would increase to approximately 12.3% of the company’s outstanding common stock.

The sourcing partnership with MGF Sourcing will result in Aeropostale’s commitment to complete minimum merchandise purchases each year for ten years. As the company fulfills its minimum purchase requirements under the sourcing partnership, all amortization payments of the associated ten-year $50 million term loan facility will be fully rebated.

Stefan Kaluzny, a managing director at Sycamore Partners, will be joining Aeropostale’s Board of Directors upon the closing of this transaction. In addition to Mr. Kaluzny, Sycamore Partners will receive the right to appoint one additional member to the board, with a third independent appointee to be mutually agreed upon by Aeropostale and Sycamore Partners. The Board of Directors will increase from 11 to 12 members.

“As demonstrated by our firm’s significant existing equity ownership in Aeropostale, as well as this new strategic partnership and financing, we believe there is tremendous value in Aeropostale’s business. We look forward to partnering with the company’s other Board members and management team to help Aeropostale realize the full potential of its brand,” said Mr. Kaluzny.

Sycamore Partners invests in consumer and retail companies. The firm has more than $1 billion of capital under management and is based in New York (www.sycamorepartners.com).

“We look forward to working with Stefan and the Sycamore Partners team, and to the valuable retail and operational expertise they bring to Aeropostale. The terms of our commitment letter with Sycamore Partners are very attractive and provide us with significantly improved financial flexibility backed by their substantial knowledge of the retail industry,” said Thomas Johnson, Chief Executive Officer of Aeropostale.

© 2014 PEPD • Private Equity’s Leading News Magazine • 3-14-14

FCP Acquires Dunkin’s Surfside Coffee Franchisee

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Fireman Capital Partners has acquired a majority stake in Surfside Coffee Company, a newly created entity that will own the Dunkin’ Donuts franchise network based in southern Florida.

Surfside Coffee Company was recently formed through the purchase of two Dunkin’ Donuts franchise networks and is now the largest Dunkin’ Donuts franchise network in Florida. Surfside operates 38 units in and around Fort Myers, Miami and the Florida Keys, and, as part of the purchase, assumed a Store Development Agreement with Dunkin’ Donuts Franchising for the development of a minimum of 23 new Dunkin’ Donuts restaurants in other Florida territories including Greater Miami.

“We are pleased to add significant resources and value to the Surfside Coffee Company as it expands its footprint in southern Florida,” said Dan Fireman, Managing Partner of FCP. “With our extensive relationships in franchising, restaurant operations and the food and beverage industry, we are uniquely poised to move ahead on substantial new development, while maintaining our focus on customer satisfaction and existing unit growth.”

Chris Mellgren, an experienced franchise network executive, has been hired by Fireman Capital Partners to lead Surfside as its new Chief Executive Officer. Mr. Mellgren has played a key role in operating Dunkin’ Donuts franchise networks for over ten years and most recently served as Chief Executive Officer of Morningside Venture Group, a 16-unit Dunkin’ Donuts Franchisee in the Orlando market.

“I am thrilled to lead the Surfside team and work closely with FCP, an industry leader with a proven track record of growing successful retail and food and beverage companies,” said Mr. Mellgren. “I’ve been in and around the Dunkin’ Donuts system for over ten years, and I’ve never been more excited about the brand and the market opportunity in southern Florida.”

Fireman Capital Partners was founded in 2008 under Chairman Paul Fireman and Managing Partner Dan Fireman. The firm invests in consumer products companies with revenues between $20 million and $150 million, and is based in Boston (www.firemancapital.com).

“Dunkin’ Donuts is a remarkable brand, one we are excited to partner with, and we see their franchise model as attractive and highly scalable,” said Liam Patrick, Partner at Fireman Capital Partner. “Florida is a rapidly growing market, and we look forward to collaborating with the Dunkin’ Donuts’ team to expand and serve the brand’s base of extremely loyal customers.”

TD Bank is serving as lender to Surfside Coffee Company. McDermott Will & Emery acted as legal advisor to Fireman Capital Partners on this transaction.

Founded in 1950, Dunkin’ Donuts is a market leader in the hot regular/decaf/flavored coffee, iced coffee, donut, bagel and muffin categories. The company has nearly 11,000 restaurants in 33 countries worldwide. Based in Canton, MA, Dunkin’ Donuts is part of the Dunkin’ Brands Group (Nasdaq: DNKN) family of companies (www.DunkinDonuts.com).

© 2014 PEPD • Private Equity’s Leading News Magazine • 3-14-14

Audax Group Acquires CURT Manufacturing

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Audax Group has acquired CURT Manufacturing, a manufacturer and distributor of towing equipment for cars and trucks.

“CURT is a leader in a growing segment of the automotive aftermarket. We look forward to working with Greg Hooks and the CURT team to grow the business organically and with acquisitions,” said Geoffrey Rehnert, Co-CEO of Audax Group.

CURT Manufacturing designs, manufactures, and distributes towing equipment and trailer and cargo management accessories for passenger vehicles and trucks. CURT sells its products through installer, distributor, e-commerce, retail, and auto dealer channels. The company is headquartered in Eau Claire, WI (www.curtmfg.com).

“We are excited to have Audax as our new partner. Its track record of sourcing and integrating add-on acquisitions will enhance our ability to grow while continuing to build on our brand’s reputation of market-leading value,” said Greg Hooks, CEO of CURT.

BMO Capital Markets and GE Capital provided senior debt financing and BB&T Capital Partners provided junior debt financing. BB&T Capital Markets advised CURT. Kirkland & Ellis served as counsel to Audax Group.

The Audax Group makes control investments of $10 million to $100 million in middle market companies with transaction values of $25 million to $500 million. Sectors of interest include industrial manufacturing; energy; outsourced industrial services; consumer products; healthcare devices and services; non-asset based logistics; technology; aerospace & defense; business services; and direct marketing. Audax has over $5 billion in assets under management in its private equity, mezzanine, and senior debt businesses. The firm was founded in 1999 and has offices in Boston and New York (www.audaxgroup.com).

© 2014 PEPD • Private Equity’s Leading News Magazine • 3-13-14

J.F. Lehman Acquires Sureclean

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National Response Corporation, a portfolio company of J.F. Lehman & Company, has acquired Sureclean Limited, an industrial cleaning and waste disposal company.

Sureclean is a provider of environmental and industrial services to the oil & gas, petrochemical, renewables, utilities, civil engineering and construction sectors. Services include industrial cleaning and waste disposal. The company is headquartered in Alness, Scotland and has 135 employees (www.sureclean.com).

National Response Corporation (NRC), acquired by J.F. Lehman in March 2012, is a provider of diversified environmental, industrial and emergency response services. The company has approximately 800 employees and is headquartered in Great River, NY (Long Island) with regional offices throughout the US and internationally (www.nrcc.com).

“Since our acquisition of NRC in 2012, the company has demonstrated strong growth and we are delighted to be able to announce the addition of Sureclean to the group, bringing with it expansion into new geographies and a range of new, complimentary service capabilities,” said Alex Harman, a Partner at J.F. Lehman.

J.F. Lehman & Company is a middle-market private equity firm focused primarily on the maritime, defense, and aerospace sectors. The firm was founded by Dr. John Lehman, who served six years as Secretary of the United States Navy. To date, J.F. Lehman has made investments in companies with an aggregate transaction value of approximately $1.6 billion. The firm was founded in 1992 and is headquartered in New York with additional offices in Washington, DC and London (www.jflpartners.com).

Senior debt financing for the acquisition was arranged by BNP Paribas Securities. Ernst & Young served as financial advisor to NRC and Jones Day provided legal counsel to NRC.

“NRC has experienced significant growth in its international business in recent years and the addition of Sureclean to the group further strengthens and broadens our service offering. We believe the combination of NRC’s global footprint and Sureclean’s quality personnel, cutting edge technology and proven track record makes for a strong strategic fit,” said Steve Candito, CEO of NRC.

© 2014 PEPD • Private Equity’s Leading News Magazine • 3-12-14

Salt Creek Has Partial Exit at Ultracor

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Salt Creek Capital has sold a majority equity interest in its portfolio company Ultracor to Gemini Investors. Salt Creek first invested in Ultracor in 2008 and remains a minority investor in the company.

Ultracor is a manufacturer of high-performance composite materials and systems for the space and aerospace industries. The company was founded in 1995 and is headquartered in Livermore, CA (www.ultracorinc.com).

“It has been a pleasure to support Stan and the team at Ultracor for the past five years,” said Dan Mytels, Managing Director at Salt Creek Capital. “We appreciate the opportunity to work with Gemini, who we see as a value-added investor, to support the company’s next phase of growth.”

Salt Creek Capital invests in lower middle market companies located anywhere in the US that have $3 million to $50 million in revenue. Sectors of interest include business services, distribution, energy services, franchising, logistics and specialty finance. The firm is based in Menlo Park, CA (www.saltcreekcap.com).

Gemini Investors makes equity investments of $3 million to $8 million in companies with revenues of $10 million to $100 million and EBITDAs of at least $1 million. The firm is currently investing Gemini Investors V, LP, which has $190 million of committed capital. Gemini Investors was founded in 1993 and is based in Wellesley, MA (www.gemini-investors.com).

“Since acquiring Ultracor in December 2008, we have worked hard to expand our business and provide the industry with innovative products” said Stan Wright, President of Ultracor. “We look forward to working with Gemini to continue to create critical applications and solutions for our industry leading customers.”

© 2014 PEPD • Private Equity’s Leading News Magazine • 3-12-14