Deals We’ve Done | Candlewood Partners

Candlewood-Tombstones-1845 — AVC Partners

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AVC Partners

Company Background

AVC Partners provides expert navigation for accelerated growth for Companies between $5 and $15 million of EBITDA in the business services, logistics, and manufacturing sectors. AVC Partners brings the benefits of patient capital, professional business acumen and market insights to assist business owners accelerate growth, and realize greater levels of success

Situation

Candlewood Partners served as exclusive advisor for AVC Partners in its acquisition and recapitalization of D&T Trucking, Rowdy Farms, and Gila Hotshot to create the leading Proppant Logistics company in North America; subsequently rebranded as 1845 Oil Field Services.

Transaction Overview

AVC Partners together with the existing management teams structured the deal to include three separate but related acquisitions. Candlewood Partners arranged five simultaneous financings, utilizing a diverse capital base of senior capital, sale-leaseback, and junior capital to meet both the Company’s acquisition capital needs as well as provide the Company with a strong balance sheet to support its anticipated growth.

img-candlewood-tombstones_BWIP — BWIP V LLC

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BWIP V LLC

Company Background

BWIP V LLC is a private multifamily real estate investor.

Situation

BWIP V LLC, a private multifamily real estate investor, was looking to acquire a 1,184 unit multifamily portfolio in the Cincinnati/Dayton market and needed a flexible equity partner that would allow them to perform the necessary capital expenditures and work within the timelines of assuming existing agency debt.

Transaction Overview

Candlewood Partners was engaged to source a single joint venture equity partner for $16,000,000. Once engaged, Candlewood quickly identified a Midwest based private equity firm that was comfortable with the track record of our client as well as the market. The entire deal was transacted from engagement to close within 36 days. The JV partner that Candlewood identified has also gone on to make additional investments with our client.

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Chart Industries

Company Background

Chart Industries is a $300 million, publicly held manufacturer of standard custom-built industrial process equipment for cryogenic applications.

Situation

The Company’s financial position had become distressed and was seeking to restructure its balance sheet during a Chapter 11 filing.

Transaction Overview

Candlewood principals negotiated a plan of reorganization with the Company’s senior lenders and concurrent with those efforts, initiated a market test process to gauge the viability of a sale of the Company at an appropriate valuation level. Candlewood also continued its advisory role with Chart through the Company’s Chapter 11 bankruptcy filing and plan confirmation.

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Cornerstone Pharmacy

Company Background

Cornerstone Pharmacy operated an institutional pharmacy distributing prescription medications and over-the-counter products to residents of long-term care facilities such as skilled nursing facilities, assisted living facilities and special needs facilities.

Situation

The shareholders of the Company were the owners of a diverse group of healthcare operating entities and sought a transaction to provide liquidity in order to refocus their resources on other investments within the healthcare industry.

Transaction Overview

Candlewood Partners was engaged as the exclusive investment banker and financial advisor to the shareholders of Cornerstone Pharmacy. Candlewood marketed the Company to select strategic and financial buyers and identified, negotiated and closed the transaction with Remedi SeniorCare.

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Duramax Marine, LLC.

Company Background

Duramax Marine, LLC is a manufacturer and worldwide distributor of fluid lubricated bearings, heat exchangers, fender protection systems, and rudder and propeller shaft sealing design solutions for the commercial, military, and pleasure marine industries.

Situation

The Company’s shareholder sought a liquidity event to diversify his personal net worth tied to the business.

Transaction Overview

Candlewood Partners advised the Company and its shareholders through a previous transaction and led the strategic evaluation of possible liquidity alternatives ranging from the sale to an ESOP to the sale to strategic and financial buyers. After evaluating these alternatives, the shareholder of Duramax Marine, LLC chose to sell an equity interest in the Company to an entity owned by Duramax Marine Employee Stock Ownership Plan. The transaction closed at a fair market valuation and allowed the exiting shareholder to obtain his stated liquidity objectives.

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Engineered Materials Solutions, Inc.

Company Background

Engineering Materials Solutions, Inc. is the largest producer of clad metals in North America; serving automotive, industrial controls, and telecommunications markets.

Situation

The Company’s senior lending group had become fatigued and needed to be taken out of the credit.

Transaction Overview

Candlewood Partners was engaged by the Company to obtain replacement financing to acquire the loans held by its senior lender group at a discount (approx. $50 million of senior debt). Candlewood structured and negotiated an exchange offer with holders of the Company’s junior debt at an 85% discount (approx. $30 million), along with sourcing an additional equity investment.

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Gasko Rhopac

Company Background

Gasko Rhopac is a fabricator and converter of flexible, non-metallic materials into tight tolerance parts and components that include diaphragms, seals, pressure sensitive tapes, gaskets, and vibration control & sound dampening solutions.

Situation

Cornerstone Industrial Holdings, Inc., which owned Gasko Rhopac for many years, sought liquidity from the investment for its shareholders

Transaction Overview

Candlewood Partners was engaged as the exclusive investment banker and financial advisor to the shareholders of Gasko in connection with the sale of the Company. Candlewood Partners marketed the opportunity to select strategic and financial buyers and identified, negotiated and closed the transaction with Lazarus Capital Partners. The transaction closed at a selling price (and EBITDA multiple) significantly higher than the seller anticipated.

img-candlewood-tombstones_gautier — Gautier Steel, Ltd.

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Gautier Steel, Ltd.

Company Background

Gautier Steel is a manufacturer of non-standard shaped carbon and alloy flats, sharp and round cornered squares, and special sections sold into multiple end markets, including bridge decking, capital goods, railroad, material handling, agriculture, machine tool makers and others.

Situation

The shareholders of the Company sought a recapitalization of the Company in order to diversify personal estates.

Transaction Overview

Candlewood Partners was engaged as the exclusive investment banker and financial advisor to the shareholders of Gautier Steel. Candlewood marketed the opportunity to a select group of senior lenders, and negotiated and closed the transaction with the Company's incumbent bank.

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Grand Eagle

Company Background

Grand Eagle operated more than 30 separate motor repair locations along with two motor, switchgear and transformer manufacturing facilities.

Situation

Following years of weak operations and declining sales, the Company filed for Chapter 11 bankruptcy protection.

Transaction Overview

Candlewood Partners was engaged by the Department of Justice to manage the wind-down and sale of the Company’s aforementioned assets, which included over 30 separate locations. Candlewood Partners implemented a sophisticated management reporting and control system, which allowed for the efficient reporting and control of each of the business units while also preparing each for its ultimate sale. Following several months of marketing, each of the separate business locations was sold in a series of more than 20 unique transactions, which were completed during the course of a six-week period.

img-candlewood-tombstones_hines — Hines Nurseries

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Hines Nurseries

Company Background

Hines Nurseries is one of the largest commercial nursery operators in the North America, producing a broad assortment of ornamental shrubs and color and container-grown plants, primarily for consumer outdoor use. The Company operates six nurseries in four states totaling nearly 3,100 acres of land and sells to national "Big Box" retailers such as The Home Depot, Lowe's Companies and Wal-Mart.

Situation

The Company experienced a challenging operating environment and entered into a Chapter 11 bankruptcy filing in 2008. New owners acquired the business in 2009 and subsequently faced additional financial difficulties and filed for Chapter 11 bankruptcy in 2010.

Transaction Overview

Candlewood Partners was engaged by the Company to conduct a Sec. 363 sale process and auction. In connection with the sale, Candlewood marketed the Company to a broad universe of both financial and strategic buyers, and negotiated and closed the transaction with Black Diamond Capital Management.

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Jancor Companies

Company Background

Jancor Companies is a manufacturer of vinyl windows and siding for the residential market.

Situation

The Company was experiencing operational difficulties and needed assistance in restructuring its operations.

Transaction Overview

Candlewood developed a plan to consolidate five autonomous companies into two efficient operating units. The focus then turned to restructuring and/or refinancing the Company’s existing indebtedness and Candlewood ultimately managed an expedited sale process to sell the Company’s assets to strategic buyers in a bankruptcy proceeding.

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Lazy Days RV Center, Inc.

Company Background

Lazy Days RV Center, Inc., the world’s largest recreational vehicle dealership operating out of a single superstore, is a privately held company with 70% ESOP-ownership.

Situation

Lazy Days was facing bankruptcy and sought to recapitalize the business.

Transaction Overview

The Principals of Candlewood represented the buyer in negotiating the terms of the recapitalization, and structured and syndicated $212.5 million of senior and subordinated financing for the transaction. As a major component of the restructuring negotiations, Candlewood performed extensive financial modeling as well as delivering a comprehensive valuation, liquidation and bankruptcy analysis. The financing consisted of $110 million of senior notes from a five member bank group, a $65 million commitment for inventory financing and $37.5 million of senior subordinated notes purchased by five institutional investors. Benefits to the principal selling shareholder included tax deferral of the sale proceeds, a significant incentive compensation package, as well as meaningful equity interest in the successor company.

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Level Propane Gases, Inc.

Company Background

Level Propane was a distributor of propane gas for the home heating market.

Situation

The Company had failed to produce financial statements for the preceding three years while also neglecting to implement proper internal controls.

Transaction Overview

Candlewood Partners was engaged to oversee management for the debtor-in-possession lender during the firm’s turnaround. During this time, Candlewood Partners took responsibility for developing accounting and business controls, implementing operational discipline and managing the reconstruction of the Company’s financial statements. After the new investor took full control, Candlewood managed the audit of the historical financial statements by a nationally recognized accounting firm, which allowed the company to be sold to AmeriGas Partners LP, a public company, only 90 days from the date that Candlewood Partners had taken on full management responsibility.

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NCS HealthCare, Inc.

Company Background

NCS HealthCare, Inc was a Publicly traded provider of pharmacy services to long-term care institutions, including skilled nursing facilities and assisted living facilities.

Situation

The Company’s financial position had become distressed was seeking to avoid a Chapter 11 bankruptcy filing.

Transaction Overview

Candlewood principals were brought in and negotiated an informal 18 month standstill with the senior lenders, subordinated note holders and key trade creditors that provided an opportunity to complete an exhaustive review of the company’s strategic options and avoid Chapter 11. Candlewood negotiated with two competing bidders and the resulting merger transaction provided a total value of the transaction at $477.6 million (11.6x EBITDA), recovery of the $339 million owed to all creditors, and $138 million return to public shareholders. In connection with the Board’s evaluation of various strategic alternatives, Candlewood delivered two separate fairness opinions, one in connection with a merger transaction and another in connection with a public tender offer followed by a short-form merger transaction. In addition, through deposition testimony, Candlewood principals supported the company’s and Board’s defense of various shareholder lawsuits.

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Net Perceptions, Inc.

Company Background

Net Perceptions, Inc. was the public shell of a former developer and marketer of software solutions.

Situation

The Company had declared bankruptcy and was just a public shell of the former software solutions developer and marketer.

Transaction Overview

Candlewood reviewed unsolicited offers on behalf of the Company’s board of directors and compared offers with a proposed plan of liquidation. Candlewood then negotiated with potential suitors regarding proposed terms and established and managed a process to bring the bidding process to a successful conclusion followed by a distribution to stockholders.

img-candlewood-oakstreet — Oak Street Real Estate Capital, LLC

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Oak Street Real Estate Capital, LLC

Company Background

Oak Street Real Estate Capital, LLC, is a private equity real estate fund.

Situation

Oak Street Real Estate Capital, LLC, a private equity real estate fund, was looking to acquire a single tenant net leased headquarters facility leased to an investment grade tenant on a long-term lease. The fund mandates only allow them to allocate a certain percentage of the fund to single transaction, therefore, our client required additional equity capital to execute on the transaction.

Transaction Overview

Candlewood Partners was engaged to act as the placement agent to source $17,000,000 in equity from high net worth individuals while working under the strict timeline of the purchase contract. Once engaged, Candlewood managed the entire marketing and equity procurement process and ultimately secured fifteen separate investors within a 45-day timeframe allowing our client to close on the specified closing date in the contract.

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P.T. Services Rehabilitation

Company Background

P.T. Services Rehabilitation, Inc. is a patient-focused physical, occupational and speech therapy provider with 26 outpatient clinics in non-urban areas of Ohio, Michigan and Iowa.

Situation

The shareholders of the Company sought partial liquidity from their investment in the Company and to structure a transaction that would enable employees to earn equity interest in the business.

Transaction Overview

Candlewood Partners was engaged as the exclusive investment banker and financial advisor to the shareholders of P.T. Services in connection with the sale of the Company. Candlewood Partners initially marketed the opportunity to select financial buyers and negotiated a Letter of Intent with a buyer who later withdrew due to funding issues. Candlewood promptly evaluated other buyers and determined the optimal strategy to achieve the shareholder’s objective for liquidity and employee incentives was to sell the Company to an Employee Stock Ownership Plan. Candlewood advised the Company through the structuring and financing of the ESOP, which resulted in a valuation comparable to previously submitted offers.

Paragon Holdings — Paragon Corporate Holdings

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Paragon Corporate Holdings

Company Background

Paragon Corporate Holdings manufactures and distributes printing products for the quick print and small commercial printing markets.

Situation

The Company’s financial position had become distressed and was seeking to restructure its balance sheet to avoid a bankruptcy filing.

Transaction Overview

Candlewood was engaged as Financial Advisor to the Company to restructure the company’s Senior Note. By structuring the new note with a combination of cash, non-maturing debt, and certain equity conversion rights to the previous debt holders, the client successfully avoided a bankruptcy filing.

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Pharmacy Management Group

Company Background

Pharmacy Management Group is a provider of pharmacy services to long-term care institutions, including skilled nursing facilities and assisted living facilities.

Situation

The controlling shareholders sought to sell the Company in order to provide liquidity and pursue other ventures.

Transaction Overview

Candlewood Partners was engaged as the Company’s exclusive investment banker and financial advisor and conducted a limited auction targeting only strategic buyers. Candlewood Partners developed significant buyer interest and negotiated a sale to PharMerica Corporation (NYSE:PMC).

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PTC Alliance Corporation

Company Background

PTC Alliance Corporation is a manufacturer and marketer of welded and cold drawn mechanical steel tubing.

Situation

The Company’s financial position had become distressed and was facing a bankruptcy filing.

Transaction Overview

Candlewood was engaged to negotiate a DIP Loan and to conduct a Sec. 363 auction sale of the Company to one the Company’s senior lenders (and largest shareholder). In connection with the sale, Candlewood marketed the Company to a global group of strategic and financial buyers, including the largest steel conglomerate in the world. Candlewood provided a valuation opinion in connection with the financing and Sale, and performed extensive financial modeling and other valuation analysis.

candlewood-quality-mold — Quality Mold, Inc.

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Quality Mold, Inc.

Company Background

Quality Mold, Inc. is a global supplier of tire molds. The Company has the capability to produce thousands of molds per year to service virtually every tire manufacturer across the globe.

Situation

The Company sought to provide liquidity to certain shareholders of the business.

Transaction Overview

Candlewood Partners was engaged as the exclusive investment banker and financial advisor to Quality Mold in connection with the sale of an equity interest in the Company. Candlewood Partners marketed the opportunity to select strategic and financial buyers and identified Saehwa Machinery Co, Ltd., a South Korean-based strategic with its own tire mold manufacturing facility in Northeast Ohio. The transaction closed and allowed the exiting shareholder to achieve the liquidity objective at a premium valuation.