Advanta Netherlands Holdings BV1
At the time of acquisition, Advanta was the fifth largest agronomic seed company in the world and the largest independent company in the industry with approximately $290 million in revenue.
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Advanta had several characteristics including a stable diversified revenue stream, leading market share positions in key crop variety in certain geographic regions, leading R&D capabilities and technology positions. Their high EBITDA margins and excellent cash flow generation characteristics were also highly desirable.
Through a focused, proactive agribusiness search, Advanta was identified as an attractive target more than two years prior to acquisition. Working under the premise that no other single strategic was likely to or capable of buying the whole business, an alliance was formed with Syngenta, the world's leading agricultural chemical company, to facilitate the acquisition. Control of Advanta's various global business units was split with Syngenta in a transaction structured to address antitrust and technology licensing issues faced by Syngenta. $75 million was invested to complete the transaction in September 2004.
In addition to the growth of various core business lines and geographies, a comprehensive legal reorganization of 27 Advanta entities in 17 different countries was undertaken in order to position them for tax-efficient divestiture. In less than 18 months, a 4.1x return was realized on the initial investment through four strategic divestitures.
1 Advanta Netherlands Holdings BV was a portfolio company of the Predecessor Firm's Fund II portfolio.
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Alaska Communications Systems2
Alaska Communications Systems, Inc. (“ACS”) was the leading facilities-based telecommunications services provider and the largest local exchange carrier ("LEC") in Alaska and the 13th largest LEC in the United States. ACS provides consumer and business customers with a complete range of telecommunications services.
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In May 1999, after two separate, but concurrent, regulatory approval processes, each lasting approximately nine months, the acquisition and integration of two local telephone companies (PTI and ATU) in Alaska was completed simultaneously, forming ACS. The Federal Communications Committee and the local Alaskan regulatory body, the Regulatory Commission of Alaska, approved the combination of the only two local telephone companies in the area due to a number of structural nuances. The investment opportunity in PTI resulted from the predecessor firm's long-term relationship with the management team and its ability to handle a complicated regulatory process and provide certainty of closing.
After completing the acquisition, Alaska Communications Systems completed several capital markets transactions that increased shareholder value during a period of stable revenue and earnings. First, ACS completed an IPO in 2000 (NASDAQ: ALSK), which generated $140 million of proceeds. Furthermore, in 2003, ACS completed the spin-out of its directory business to the Canadian Income Trust market at a premium to the then current trading multiple (9.6x EBITDA versus 7.0x EBITDA). Both of these capital market transactions were used as a source of financing to allow the management to invest in the assets of the business and broaden the Company's product offering to include a wireless network, which in the long term created substantial shareholder value.
Following the investment in the Company's assets, a new world class senior management team led by Liane Pelletier as CEO and President was recruited. Ms. Pelletier, joined ACS after spending 17 years at Sprint Corporation.
The investments in management and the wireless network provided a differentiated return to shareholders versus other RLEC investments' during the same time period. The continued investment in the assets of the Company allowed ACS to reinvigorate growth after a number of years of steady earnings. Subsequent to the renewed growth, in October 2004, ACS instituted a dividend policy that increased the value of the stock by over 100% in less than 12 months. In 2005, ACS recapitalized its debt structure to create interest savings that further increased cash flow available for dividends.
In 2006, the predecessor firm made its final exit from the original investment through a secondary sale. The investment's ROI and IRR substantially outperformed vintage class 1999 telecommunication investments by financial sponsors.
2 Alaska Communications Systems was a portfolio company of the Predecessor Firm's Fund I portfolio.
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Seminis Inc.3
At the time of acquisition, Seminis was among the global market leaders in the development, production and marketing of vegetable and fruit seeds in approximately 150 countries.
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Prior to the firm's acquisition, Seminis was owned by several Mexican holding companies controlled by a single shareholder, Mr. Alfonso Romo Garza. Seminis held valuable intellectual property including proprietary seed technologies and was strategically positioned to experience strong growth. Additionally, Seminis generated attractive EBITDA margins and high returns on capital given its limited capital requirements.
Beginning in 1999, liquidity challenges and credit issues led Mr. Romo Garza to seek assistance. The acquisition required settlement agreements with more than 100 foreign creditors of Seminis' Mexican holding companies, as well as highly-structured success-based equity securities, and the privatization of Seminis through a long-form merger process. Majority control of Seminis was acquired in a $606 million transaction that closed in September 2003.
In 2004, an add-on high yield debt offering was executed to enhance financial and operating flexibility, and to invest in substantial expansion of research and development facilities. During the 16-month ownership period, Seminis' EBITDA increased from $95 million per annum to $110 million per annum. Seminis was sold to the Monsanto Company in March 2005 for $1.5 billion.
3 Seminis Inc. was a portfolio company of the Predecessor Firm's Fund II portfolio.
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WireCo World Group
WireCo WorldGroup Inc. ("WireCo" or the "Company") is the largest global manufacturer of high-performance wire rope and a leading worldwide manufacturer of electromechanical ("EM") cable, synthetic rope, wire rope assemblies and specialty wire. The Company's products have a reputation for quality, performance and safety and are marketed under well-known brands such as Union®, MacWhyte®, Casar®, Camesa®, Oliveira®, Wireline Works, Phillystran®, Drumet® and US Reel™.
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WireCo's proprietary technical and manufacturing expertise utilizes advanced metallurgical and material technologies to develop mission-critical products used in heavy lifting, pulling, supporting and suspension applications, where functionality and safety are the top priority. The Company maintains a comprehensive product portfolio across a diverse range of industries, including: crane, mining, oil and gas, general industrial, wire, fishing/marine and structures. The Company has strong research and development capabilities with a team of engineers and metallurgists, all of whom have extensive experience in state-of-the-art metallurgy, rope design and plastic impregnation, and are dedicated to value-added product development initiatives. WireCo's manufacturing footprint, with 13 facilities across 4 continents, is supplemented by a global distribution network. In addition, its joint venture with Wuhan Iron and Steel Group provides increased manufacturing capacity in China.
Paine & Partners acquired WireCo on February 8, 2007 with the following investment thesis:
• Leading market shares
• High margin, consumable products with recurring revenue
• Diverse and growing end markets
• Opportunities to invest in high ROI-generating projects
• World-class management team
Since Paine & Partners' acquisition of WireCo, the firm and management have executed several strategic add-on acquisitions: Wireline Works Inc. (completed on February 26, 2007), a Canadian manufacturer of EM cable, Casar (completed on August 23, 2007), a European manufacturer of high performance wire rope with a premium industry brand, US Reel (completed on November 13, 2007), a leading U.S. wooden reel supplier, Phillystran (completed on December 31, 2009), a leading manufacturer of high tenacity fiber ropes, strands, braids and strength members, Oliveira (completed on November 16, 2010), a high performance synthetic rope manufacturer targeted at deepwater mooring line and towing applications and Drumet (completed on July 18, 2011), a leading manufacturer of wire rope, steel wire, and steel wire band in Eastern Europe. These acquisitions have enhanced the Company's leadership position and have served to diversify its end market exposure.
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