THREE HISTORICAL/SUCCESSFUL DEALS

A-I CARBIDE

After being purchased by Del Rey Capital (and later sold to management) this manufacturer of wear-resistant parts became the subject of a leveraged transaction that allowed V. Russell Benedict to purchase the company for under $2mm. Six years later, and aided by FNCP’s Manager, Russ sold a 49% interest for $3mm (plus a $3mm earnout) to a group including George Soros and Robert Day (TCW), in connection with a re-cap of the company. Less than 4 years later, FNCP’s Manager helped sell the entire company to Greenfield Industries for $15mm. Russ’ proceeds (plus earnout) netted him an IRR well in excess of 50% with the Soros group’s return coming in at over 40% IRR.

BAYLINE PAPER PRODUCTS

While at Imperial Ventures, FNCP’s Manager assisted Management Resource Partners in a leveraged buy-out of this Bay Area corrugated converter. The total transaction value was approximately $5mm, of which $700k was an earn-out to the Sellers. Imperial provided $775k, $575k of which was sub-debt and $200k of convertible preferred stock. The stock was convertible into 47.5% of the company. Over the next five years, while an active director, sales doubled (to approximately $15mm) and earnings tripled (to over $2mm). At this point, certain members of the management team bought out the other shareholders.. Based on proceeds from those sales, (and at least one independent offer) the total enterprise value was approximately $10mm. This, along with interest, fees, and debt amortization, would have resulted in an IRR in excess of 40%.

MULTI-AG MEDIA

While President of ICII Ventures (an SBIC), FNCP’s Manager was approached by a management group to provide $2.5mm to buy HFW Communications, a specialty publishing house. He re-structured the transaction and provided $600k of sub-debt for a 49.5% interest with management “claw-back” provisions of 25% (5%/yr.). Subsequently, ICII provided another $150k for some add-on acquisitions, the largest of which, Phoenix Data Processing was sourced by ICII. These collective transactions doubled revenue and profit. After 3+ years, ICII sold its interest to management for $2mm that, along with fees, interest and previous return of principal, gave them a return (IRR) in excess of 35%.