Apollo, French State To Buy Rio’s Alcan EP

PARIS (Reuters) - Rio Tinto (RIO.L)(RIO.AX) plans to sell a controlling stake in its French aluminum unit to U.S. private equity firm Apollo Management [APOLO.UL] and the French state, buoying Paris’ control over the strategically important industry.

The sale of Alcan Engineered Products (AEP) would create a new aluminium champion in France six years after former parent Pechiney was sold to Canada’s Alcan, causing a political outcry.

Under the proposed deal, which included no financial details, Apollo would take 51 percent of AEP while France’s FSI strategic investment fund would take 10 percent, the FSI said on Thursday. Rio would keep the rest and continue to be a partner and supplier.

In a statement, Rio said it would respond to the offer after talking to employee representatives.

“The presence of the FSI means it is anchored in France and will continue to be,” FSI executive board member Bertrand Finet said.

“To be able to list this new group on the stock exchange in a few years would in my view be an interesting step in this new story,” he added.

Most of AEP was once a part of French aluminium giant Pechiney and makes aluminium parts for Airbus (EAD.PA) planes, TGV trains and Peugeot (PEUP.PA) cars. The FSI also owns stakes in geophysical services provider CGG Veritas (GEPH.PA) and grain producer Limagrain, among others.

AEP, which employs around 10,000 staff, made sales of about $4 billion last year, over half of which came from European clients.

The transaction is meant to infuse new life into a company whose sale to Canada’s Alcan in 2003 sparked calls to protect French industrial flagships from foreign takeovers.

Pechiney afterwards was swallowed up by global mining group Rio Tinto in 2007, when it bought Alcan.

Some of the AEP’s plants are part of the original Pechiney, while others used to belong to Alcan and Alusuisse, with which the Canadian company merged in 2001.

Founded in 1855, Pechiney used to be one of France’s biggest industrial groups, and was nationalised in the 1980s before being privatised again in 1995.

The financing of the deal is not being made through a leveraged buyout, so debt will not be piled on the new company.

“Apollo is acquiring the business at the bottom of the cycle,” a person close to the matter told Reuters. “In my view, the real recovery will not be before 2011.”

The deal will be the first time that Apollo has made a sizeable investment in France. It opened an office in London only four years ago and has $50 billion under management, of which two-thirds are private equity.

The fund has experience managing heavy industries as it still owns stakes in Noranda Aluminium Holding (NOR.N), which smelts and refines aluminium, and which floated last month.

The U.S. company still holds investments in Metals USA (MUSA.N), which also obtained a listing last month.

By Astrid Wendlandt and Julien Ponthus

More Buyers, More Sellers As Mergers Rebound

The M&A market has gone from empty to crowded, with cash-heavy strategics and overhung private equity firms on the prowl for new deals.

“It’s crazy busy,” says Orlando Bravo, managing partner of Thoma Bravo. “It’s August and the whole financial industry [usually] slows down right before Labor Day, but we’re seeing a lot of activity in investments and portfolio companies.”

Thoma Bravo, which invests in mid-market technology and services companies, has been particularly busy. The firm closed its $242 million buy of Double-Take Software in July. Last month, it completed a $717 million acquisition of SonicWall, a provider of IT security and data backup and recovery solutions.

The downturn provided an opportunity for good deals. Thoma Bravo has completed nine acquisitions, including add-ons, since 2008. It also sold Datatel for $570 million to Hellman & Friedman in 2009, as well as its convertible preferred position in JDA software.

Bravo, who himself focuses on software, says firms with a “clean growth business” were selling for 7.5x EBITDA during the downturn. This has since jumped to 9 to 10x EBITDA, he says. Unfortunately, there were few “clean” companies available in 2008. For examples, a $200 million company, with 35% margins that was growing 15% year-over-year, wasn’t up for sale in 2008. But a $200 million firm with 10% margins — that was solid but had trouble growing its business– could be found, he says. In 2008, those “problematic” companies could be bought for about 60% of current prices.

“But to do those deals you need to have an operating team with a strategy for that business,” he says. “If not, it’s not going to make sense.”

With better multiples, come more participants. Many companies held off selling during all of 2008 and much of 2009. Valuations were low and financing was scarce or unavailable. “Anyone who wanted to sell during the last two-and-a half years didn’t and they’re in the market right now,” he says.

PE firms, largely inactive during the downturn, are looking to put their money to work. “The overhang is a big, big issue,” says Bravo, who claims his firm doesn’t have the problem. Thoma Bravo has invested roughly $500 million since 2008, including the buys of Acresso Software for $200 million in 2008 and Manatron for $66 million. Both deals came from the firm’s last fund, Toma Bravo IX, which raised $822.5 million in early 2008. About half is invested, Bravo says. He expects the PE shop will begin fundraising for its next fund at the end of 2011.

Strategics are also dealing with their own overhang, which is prompting them to seek out buys. During the downturn, strategic buyers were not active as they saw their stock prices tumbling and their boards wanted to reserve cash. That has since changed. Strategics that were out of the market from 2008 to 2009 now have a healthy balance sheet that is flush with cash. They also must return funds to investors via dividends or redeploy it. “They want to do deals,” Bravo says.

Meyrick Cox Joins Moelis & Co.

Meyrick Cox has agreed to join Moelis & Co. as a managing director in the firm’s London office. He previously was with Rothschild, asgobal head of the auto and steel group.


Moelis & Company today announced Meyrick Cox, a senior advisor to global industrial companies, is joining the firm as a Managing Director in the London office. Mr. Cox will provide advisory services to boards of major industrial clients, governments and financial sponsors with a particular focus on the automotive and steel sectors.

Mr. Cox will join Moelis & Company in October from Rothschild where he was most recently the Global Head of Auto & Steel. Previously, he worked for Goldman Sachs as Co-Head of Industrials for Europe, the Middle East and Africa (EMEA). Mr. Cox has over 20 years of experience in the industrials space including completing strategically important transactions for a wide range of companies globally.

“Having been a long-term competitor of Meyrick’s, I have always admired his influence, judgement and impact,” said Mark Aedy, Head of EMEA Investment Banking for Moelis & Company. “Given his global relationships and transaction track record, I am delighted he will be our partner at Moelis & Company as we forge a leading global industrials franchise.”

Over the course of his career, Mr. Cox has represented the world’s largest automobile makers, auto components businesses and steel companies across a broad geography including EMEA, India and China.

“Meyrick has a rare combination of experience and insight that business leaders trust when they face key strategic decisions,” said Ken Moelis, Chief Executive Officer of Moelis & Company. “The industrials sector is a core market which represents a significant focus for us and Meyrick’s role will be integral to expanding our global industrials coverage.”

About Moelis & Company
Moelis & Company, named Best Global Independent Investment Bank in 2010 by Euromoney, is a global investment bank that provides financial advisory services and capital raising solutions to clients in connection with mergers and acquisitions, restructurings and other strategic matters. The firm also manages investment funds that integrate capital with its advisory expertise. With over 370 employees, Moelis & Company serves a broad client base through its offices in New York, Boston, Chicago, London, Los Angeles and Sydney. For more information, please visit www.moelis.com.

Jen-Coat Switches PE Sponsors

Wellspring Capital Management has acquired Jen-Coat Inc., a maker of flexible packagng for the food, healthcare and industrial markets, from CGW Southeast Partners. No financial terms were disclosed.


Wellspring Capital Management LLC (“Wellspring”) announced today that it has acquired Jen-Coat, Inc. (“Jen-Coat” or the “Company”), a leading flexible packaging manufacturer in the food, healthcare and industrial segments, from CGW Southeast Partners.  Jen-Coat is the first subsidiary of a new holding company formed by Wellspring and industry executive Harold Bevis.  Financial terms of the transaction were not disclosed.

Based in Westfield, Massachusetts, Jen-Coat’s products are composite substrates used in demanding applications such as composite food packaging structures, flexible lidding substrates, single-use packets/sachets, composite medical substrates, label products and release liners.  The Company can combine virtually unlimited substrates (paper, fabric, film and foil) into single composite substrates to meet specific performance attributes such as flavor control, shelf life, moisture vapor transmission rates, oxygen transmission rates and package mechanical integrity.  The Company uses sophisticated manufacturing technology including extrusion coating and laminating, adhesive laminating and metalization.  A significant portion of the Company’s products are printed and the Company utilizes stateoftheart 10-color printing equipment.  The Company’s facilities are compliant with food industry and medical industry requirements.

A recognized leader in packaging innovation, Jen-Coat is wellknown for its technical and product development expertise, and is one of the first to offer environmentally friendly solutions.  The Company’s excellent reputation and collaborative approach has yielded longterm, bluechip customer relationships.  A significant portion of the Company’s revenue is conducted under proprietary, multiyear contracts.

Mr. Bevis will serve as Chairman and Chief Executive Officer of the new holding company.  Mr. Bevis has led three successful private-equity backed build-ups, creating significant value through operational improvements, internal growth programs, acquisitions and team building.  He most recently served as CEO of Pliant Corporation, a producer of value-added film products, which he led through a complete operational turnaround to a successful sale.  Mr. Bevis and Wellspring plan to grow the new company through capex investment, internal initiatives and acquisitions in order to better serve its customers.

Mr. Bevis said, “In part due to recent consolidation, the flexible packaging industry needs a new high-end competitor and we are going to create one. We will build the company through greenfield investment, capacity expansion, organic growth, continued development of innovative technologies and synergistic acquisitions. Jen-Coat is an excellent starting point for the new company, as it has strong and unique composite structure manufacturing expertise; outstanding six sigma operational performance; and excellent on-time customer service.  We look forward to communicating with current and prospective customers about our considerable capabilities and future plans.”

Jen-Coat Founder and Chief Executive Officer Jim Kauffman and his management team will remain with the Company, and Mr. Kauffman will serve on the Board of Directors of the new company.  Mr. Bevis added, “Jim Kauffman co-founded the Company in 1972 and built it the right way.  I am extremely happy the team is staying on to take it to the next level.”

Mr. Kauffman said, “Our team is proud of what Jen-Coat has accomplished over the years and is excited to partner with Wellspring and Harold as we enter the next phase of growth and expansion.  Wellspring and Harold have a strong track record of supporting management teams through considerable strategic and operational expertise, as well as financial resources.  We look forward to a successful future and to continuing to deliver the best products and services to our customers.”

Carl M. Stanton, a Managing Partner of Wellspring, said, “We are excited to form this new flexible packaging holding company and to launch the company with the acquisition of Jen-Coat, which is well positioned for continued growth.  Harold Bevis has a track record of value creation in the packaging industry and we are delighted that he will lead our new company.  We are also extremely honored to be partnered with Jim Kauffman and his executive team at Jen-Coat, as they have an outstanding Company with a unique culture and years of successful performance for their customers.  Together with Harold and Jen-Coat’s experienced and successful management team, we will pursue a range of attractive growth initiatives.”

Brookwood Associates served as financial advisor to Jen-Coat with respect to this transaction.

About Jen-Coat

Founded in 1972, Jen-Coat, Inc. supplies the food packaging, health care and industrial markets with a wide range of extrusion coated and laminated, metallized, and adhesive laminated structures. Products include sugar/sugar sub packets, paper/ foil laminations, film/foil laminations, composite can laminations, coated nonwovens, QSR wrap, release papers and many other specialty packaging materials.  Headquartered in Westfield, Massachusetts and operating out of two plants totaling 370,000 square feet, Jen-Coat has earned an industry reputation as a high-quality, innovative supplier.  Further information about Jen-Coat can be found at www.jencoat.com.

Harold Bevis Bio

Harold Bevis served as CEO of Pliant Corporation from 2003 until its sale to Berry Plastics in 2009.  Prior to Pliant, he was CEO of Jordan Telecommunications Products from 1998 until its sale to Emerson Electric Company in 2000, remaining with Emerson as Group Vice President until joining Pliant.  From 1995 to 1998, Mr. Bevis was Senior Vice President and General Manager of General Cable Corporation, which was taken public during his tenure.  He also served in executive roles at General Electric; as a consultant at Booz, Allen & Hamilton and as an engineer at General Dynamics Corporation.  Mr. Bevis received a bachelor’s degree in Industrial Engineering from Iowa State University and a MBA from Columbia Business School.

About Wellspring Capital Management

Wellspring Capital Management, founded in 1995, is a leading middle-market private equity firm that manages more than $2 billion of private equity capital. The firm’s objective is to bring partnership, experience and value creation to each investment. By teaming up with strong management, Wellspring is able to unlock underlying value and pursue new growth opportunities through strategic initiatives, operating improvements and add-on acquisitions. The firm functions as a strategic rather than tactical partner, providing management teams with top-line support, M&A experience and financial expertise, and access to resources.

Gemin X Raises $8 Million

Gemin X Pharmaceuticals Inc., an oncology drug developer with offices in both Malvern, Pa. and Montreal, has raised $8 million in Series E funding. Return backers Caxton Advantage Life Sciences Fund and Sanderling Venture Partners co-led the round. The company had announced a $16 million Series D round back in April, which included a $4 million investor option.


Gemin X Pharmaceuticals, a clinical stage biopharmaceutical company developing novel, targeted cancer therapeutics, today announced the completion of its $8 million Series E round of financing. All of the company’s preferred stockholders participated in the round, led by Caxton Advantage Life Sciences Fund, L.P. and Sanderling Venture Partners.

“We are pleased that our committed group of investors continue to support Gemin X and the future of our lead product candidate, obatoclax, as we explore strategic opportunities for this novel pan Bcl-2 inhibitor,” said Peter R. Dolan, chairman and chief executive officer of Gemin X. “The Series E funding follows on a growing body of positive clinical data from our randomized, controlled Phase 2b study of obatoclax for the first-line treatment of extensive stage small cell lung cancer (ES-SCLC), and we look forward to submitting this data for presentation at an upcoming medical conference. A positive outcome in ES-SCLC provides proof-of-principle that we expect could translate to multiple other cancer indications.”

“As an early investor in Gemin X, I am proud of the company’s achievements, most notably its progress in advancing obatoclax, a pan Bcl-2 inhibitor and the most advanced compound of its kind in the clinic today,” said Robert G. McNeil, Ph.D., founder and managing director at Sanderling Venture Partners and member of the board for Gemin X. “When the survival data from the Phase 2b study of obatoclax becomes available, we anticipate that it will provide a strong foundation for achievement of the company’s strategic goals.”

Gemin X announced in March 2010 the completion of enrollment in its ongoing Phase 2b clinical trial of obatoclax (GX15-070) for the treatment of patients with ES-SCLC. This multi-center, randomized, controlled trial is designed to evaluate the efficacy and safety of obatoclax in combination with standard chemotherapy. In the study, a combination of carboplatin, etoposide and obatoclax (the CEO arm) is being compared to a standard regimen of carboplatin and etoposide alone (the control arm) in patients with ES-SCLC. The primary endpoint of the study is comparison of overall response rate (ORR) for the CEO arm versus the control arm, based on RECIST criteria. Secondary endpoints include comparison of six-month rate of progression free survival (PFS) as well as overall PFS. Patients are also being followed for overall survival (OS) and safety. The Phase 2b study is being conducted at more than 60 leading cancer centers, primarily in the United States and Europe.

“Since our initial investment in Gemin X in June 2008, the company has made tremendous progress with its portfolio of cancer therapeutics, particularly obatoclax, which is making strides in small cell lung cancer, an area where there has been no change in standard-of-care for over 25 years and where new and improved therapies are desperately needed. As a product candidate for the first-line treatment of patients with SCLC, we believe that obatoclax represents a significant market opportunity and an important addition to the treatment regimen. We remain enthusiastic supporters of the company and its novel scientific approaches to cancer management that are now gaining clinical validation,” said Eric Roberts, co-founder and managing director at Caxton Advantage and member of the Gemin X board.

About Gemin X Pharmaceuticals
Gemin X is developing first-in-class cancer therapeutics based on reinitiating programmed forms of cell death, including apoptotic and autophagic cell death, and based on the inhibition of metabolism in cancerous cells. Gemin X currently has several clinical development programs underway, including a Phase 2 clinical trial for its lead product candidate obatoclax (GX15-070), an innovative pan Bcl-2 inhibitor, and GMX1777, a novel inhibitor of NAD+ synthesis that has completed a Phase 1 study. Gemin X also has preclinical studies underway for its Telomere Capping program. Potential treatment indications for the full scope of pipeline programs span a broad range of hematological and solid tumors, including chronic lymphocytic leukemia (CLL), melanoma, small cell lung cancer (SCLC), lymphoma, myeloma and glioblastoma multiforme (GBM). Founded in 1998, Gemin X is privately held with drug development and executive headquarters in Malvern, Pennsylvania and research and development in Montréal, Canada.

Recurly Raises $1.6 Million

Recurly, a San Francisco-based provider of billing solutions for subscription-based businesses, has raised $1.6 million in VC funding. Polaris Venture Partners led the round, and was joined by Michael Dearing, Josh Felser, Dave Samuel, Larry Mohr, Dave McClure, Babak Nivi and Naval Ravikant.

Read more at the Recurly blog…

Amplimmune Signs Big Deal with GSK

Amplimmune has signed a drug development deal with GlaxoSmithKline that includes a $23 million up-front payment and up to $485 million in milestone payments. The agreement relates to PD-1 targeting therapies that may help treat cancer and other diseases. Rockville, Md.-based Amplimmune has raised $20 million from InterWest Partners and Wellcome Trust.


Amplimmune, Inc. today announced that it has entered into a broad strategic alliance with GlaxoSmithKline (GSK) to further develop PD-1 targeting therapies that may be effective in the treatment of cancer and other diseases. GSK will obtain exclusive worldwide rights to AMP-224 as well as other potential next generation fusion proteins that target PD-1.

Under the terms of this agreement, GSK will pay Amplimmune a non-refundable upfront payment of $23 million. Amplimmune is eligible to receive up to $485 million in regulatory, development and sales milestone payments - including milestones associated with IND filing and conducting a Phase 1 trial of AMP-224. Amplimmune may also receive up to double digit royalties on global sales.

The collaboration will focus primarily on development of AMP-224, Amplimmune’s Fc-fusion protein of the B7-DC ligand (also known as PD-L2), which targets PD-1. ÊIn vivo studies with AMP-224 suggest that this product candidate can induce immune responses to tumors and pathogens sufficient to ameliorate disease.Ê Under the terms of the agreement, Amplimmune will be responsible for conducting a Phase 1 trial in cancer patients expected to begin in 2011, as well as completing cGMP manufacturing and GLP toxicology studies that support that first time in human study.Ê Research directed toward understanding the mechanism of action of AMP-224 and its therapeutic potential in oncology, infectious diseases and vaccine applications will be conducted by Amplimmune and GSK as part of the collaboration. In addition, the parties may develop next generation protein fusion candidates that target PD-1. GSK will be responsible for all other development and manufacturing activities and will have worldwide commercialization rights.

“We are very pleased to establish this broad alliance with GSK on our AMP-224 program,” said Michael S. Richman, Amplimmune’s President and Chief Executive Officer. Richman continued, “This partnership is an example of pharma and biotech companies working together towards a common goal of developing novel therapies for patients with unmet medical need and we look forward to advancing AMP-224 into clinical testing”.

About PD-1
PD-1 and its ligands play key roles in regulating T-cell mediated immune responses. High levels of PD-1 on T cells can lead to functional impairment of T cells resulting in ineffective anti-tumor and anti-microbial immunity. Targeting PD-1 on cells with high levels of PD-1 can restore immune function, resulting in tumor eradication and enhanced protection against infection.

About Amplimmune, Inc.
Founded in 2007 and headquartered in Rockville, MD, Amplimmune is focused on developing novel biologics that are key co-stimulatory/co-inhibitory molecules that rebalance the immune system and are intended for treating cancer, autoimmune disease, infectious disease, and transplantation. With its strong product-based focus, Amplimmune is rapidly advancing two lead molecules toward clinical development: AMP-224 in the area of cancer and infectious disease; and AMP-110 for autoimmune diseases. Working closely with its founders at Johns Hopkins University and other collaborators, Amplimmune is expanding its technology base in the area of immune co-stimulatory/co-inhibitory molecules and has assembled a large foundation of reagents, models, know-how, and intellectual property to further develop its product pipeline as well as to discover novel biomarkers, ligands, and receptors. The company is funded by InterWest Partners and The Wellcome Trust. For more information, please visit www.amplimmune.com.

LimkedIn Buys MSpoke

LinkedIn has made its first acquisition: MSpoke, a Pittsburgh-based provider of recommendation technology. No financial terms were disclosed. LinkedIn shareholders include Bain Capital Ventures, Goldman Sachs, McGraw-Hill Cos., SAP Ventures and Bessemer Venture Partners. MSpoke had raised around $1.5 million from groups like Innovation Works and Summa VentureWorks.


LinkedIn, the world’s largest professional network with more than 75 million members globally, has agreed to acquire mSpoke, a startup focused on making media more relevant through their recommendation technology with offerings for content publishers, research analysts and individuals.

“mSpoke and LinkedIn’s shared focus on generating relevant content make this acquisition a natural fit for us,” says Jeff Weiner, chief executive officer of LinkedIn. “We’re actively investing in solutions that help deliver valuable professional insights to LinkedIn members. The addition of mSpoke’s talented team of technologists make it an even more compelling opportunity for LinkedIn.”

mSpoke is based in Pittsburgh and was founded by chief executive officer Sean Ammirati, chairman of the board Dave Mawhinney and chief technology officer Dean Thompson. The company was also co-founded by seed investor and board member Ed Engler. The mSpoke team has deep ties with Carnegie Mellon University, a recognized world leader in advanced computer science technologies.

“As we spent time with the LinkedIn team, we were struck by how similar our visions are,” said Dean Thompson, one of mSpoke’s three co-founders. “Both LinkedIn and mSpoke are passionate about generating relevancy from the rich stream of content being created by our members. We’re looking forward to joining the team and helping provide useful recommendations that help professionals tackle problems quickly and more efficiently.”

Financial terms of the acquisition are not being released.

About LinkedIn

LinkedIn is an Internet platform company focused on connecting the world’s professionals. The company is privately held and has a diversified business model with revenues driven from user subscriptions, advertising sales and enterprise software licensing. The LinkedIn Web site launched in 2003 and is the largest professional networking site in the world with more than 75 million members, representing 200 countries and executives from every Fortune 500 company.

Tudou.com Raises $50 Million

Tudou.com, a Chinese online video sharing site, has raised $50 million in Series E funding. Temasek Holdings led the round with a $35 million investment, and was joined by return backers IDG Technology Venture Investment, Granite Global Ventures, General Catalyst Partners, Capital today, Jafco Asia, KTB Ventures and JAIC. Todou has now raised $135 million in total VC funding


Tudou (http://www.tudou.com ) today announced it has closed a US$50 million Series E funding round.

Gary Wang, Tudou Founder and CEO said that the company is investing aggressively into expanding its main advertising supported web platform, and developing mobile/portable device video technology as key future growth drivers. Tudou also plans to integrate professional content with its “Orange Box” made-for-Internet original programming debuting the first Tudou drama series in fall 2010, as well as a large UGC (user generated content) archive of over 38 million videos. Tudou is transforming its website model into a fully operated media house.

Tudou’s Series E funding round included US$35 million led by Singapore- based Temasek Holdings Pte. Ltd. (http://www.temasekholdings.com.sg ), and US$15 million from existing investors. In total Tudou has raised US$135 million in funding since the website went live on April 15, 2005, representing the largest investment to date for an online video business in China.

About Tudou.com:

Tudou.com is the leading online video platform in China, where users can upload, view and share video clips. Tudou went live on April 15, 2005 and has grown into one of the world’s largest content delivery networks hosting 38 million videos, including amateur video-blogging and user-generated videos, professional content such as movie clips, TV series and music videos from our content partners, as well as made-for-Internet original programming produced by Tudou. Tudou has established extensive business relationships with over 2500 well-known content providers, content agents, traditional and new media, as well as mobile operators in the Asian region. With the brand slogan “Today’s TV Network, Tomorrow’s Tudou,” the company’s vision is building a video destination where people can find what they want to see, share what they create, and connect with like-minded people. Tudou never stops working toward this vision since 2005.

Cornerstone Healthcare Merges with Solara Healthcare

Cornerstone Healthcare Group, a portfolio company of Highland Capital Management, has merged with Solara Healthcare. Both companies are Dallas-based providers of long-term acute care hospital services. No financial terms were disclosed.


Highland Capital Management, L.P. (”Highland”), an investment management firm based in Dallas, Texas, announced today that one of its portfolio companies, Cornerstone Healthcare Group, has completed a merger with Solara Healthcare.  Both Cornerstone and Solara are privately-owned, Dallas-based providers of Long-Term Acute Care (LTAC) hospital services.  Financial terms of the merger were not disclosed.

“Cornerstone has been a model investment since we acquired control through a debt restructuring in October 2007, with EBITDA improving from a loss of $600,000 in 2007 to over $25 million in 2009.  We are very excited to be combining Cornerstone with Solara, creating an even stronger platform for future growth,” said Patrick H. Daugherty, Partner and Head of Private Equity at Highland.  ”We look forward to applying the best practices we have implemented at Cornerstone to help the combined company further enhance its quality of care and patient satisfaction, build even stronger relationships with physicians and the community, expand services, leverage operational synergies and increase profitability in order to grow the business.”

Daugherty added: “Cornerstone has benefited from Highland’s strong healthcare and operations expertise.  We continue to leverage these skills to evaluate attractive opportunities for growth and investment in the long-term acute care space for our portfolio companies and investors, focusing on identifying operators that excel in delivering high-quality care.”

The newly-combined company consists of 18 owned and managed LTAC hospitals, operating in Texas, Louisiana, Arizona, West Virginia, Ohio and Oklahoma.  It will be led by Mike Brohm, President and CEO of Cornerstone and the Cornerstone executive management team.  Cornerstone and Solara will both continue to operate under their existing brand names.

Highland has been an active investor in the Healthcare sector since 1998.  Highland’s other large healthcare equity investments include CCS Medical, a home delivery medical supply company, and American HomePatient, a full-service respiratory company.

About Highland Capital Management

Highland Capital Management, L.P. is a SEC-registered investment adviser with approximately $22 billion of assets under management. It is one of the largest global alternative fixed income managers, specializing in bank loans, high yield credit, distressed debt, structured products, real assets, and long-short equities, with a global geographic reach.

Highland’s diversified client base includes public pension plans, foundations and endowments, corporations, financial institutions, fund of funds, governments, high net worth individuals, and mutual fund investors. To best meet the different goals of these investors, Highland offers a variety of product types, including credit funds, private equity-style funds, managed separate accounts, hedge funds, retail mutual funds, and collateralized loan obligations (CLOs).

Highland Capital is headquartered in Dallas, Texas and maintains offices in New York, London and Singapore.

Rizvi Traverse and Starwood Recap Key Air

Rizvi Traverse Management and Starwood Capital Group have recapitalized Key Air, a provider of aircraft management, worldwide charter and FBO services. No pricing terms were disclosed.


Rizvi Traverse Management, LLC, a private equity firm specializing in opportunistic investments, and Starwood Capital Group Global, LP, a leading global private investment firm focused on real estate and energy infrastructure, have announced the successful recapitalization of Key Air, a leading national provider of FBO services and best-in-class aircraft management and worldwide executive charter services.

Under the terms of the transaction, Rizvi Traverse converted a portion of Key Air’s outstanding indebtedness, which it acquired from Key Air’s lenders in December 2009, into equity.  Starwood has acquired an approximately 50% interest in the remaining debt and converted equity.  As part of the transaction, both Rizvi Traverse and Starwood have committed to support the future growth of Key Air and help ensure its continuing financial strength.

“This transaction provides a right-sized balance sheet for Key Air, further strengthening Key Air’s position as national player in the managed aircraft and charter businesses as well as a premier FBO services provider,” said Suhail Rizvi of Rizvi Traverse Management.

“We are excited about participating in the next chapter of Key Air’s growth, including the expansion of the company’s FBO operations at Waterbury-Oxford Airport as well as the national managed aircraft platform,” said Barry Sternlicht, Chairman and CEO of Starwood Capital. “The company’s long history of providing safe, unparalleled service to its customers and extraordinary growth opportunities that exist in this space made this an attractive investment opportunity for Starwood and we are pleased to be working in partnership with Rizvi Traverse to help provide the company with the financial strength to realize its full potential.”

“Key Air is excited about the recapitalization and energized to have the support and strong financial backing of both Rizvi Traverse and Starwood Capital.  This transaction will allow Key Air to grow and leverage our existing platform while assuring continued financial stability,” said Bob Marinace, CEO of Key Air.

About Rizvi Traverse Management, LLC

Rizvi Traverse Management, LLC is a private investment firm with offices in New York, Los Angeles and Birmingham, Michigan. Rizvi Traverse Management, LLC seeks value-oriented investment opportunities across all industries.

About Starwood Capital Group Global, LLC

Starwood Capital is a private, U.S.-based investment firm with a core focus on global real estate.  Since the group’s inception in 1991, the firm, through its various funds, has invested more than $6 billion of equity capital, representing $21 billion in assets. Starwood currently has approximately $14 billion of assets under management. Starwood maintains offices in Greenwich, Atlanta, San Francisco, Washington, D.C., London, Mumbai and Tokyo.  Starwood has invested in nearly every class of real estate on a global basis, including office, retail, residential, senior housing, golf, hotels, resorts and industrial assets.  Starwood and its affiliates have successfully executed an investment strategy that includes building enterprises around core real estate portfolios in both the private and public markets.

About Key Air

For 25 years, Key Air has been an industry leader in aircraft management, worldwide charter and FBO services.  Key Air has Fixed Base Operations and private aviation terminal space in strategic locations nationwide to provide a seamless private air travel experience. With convenient proximity to major U.S. cities like New York, Boston, Minneapolis-St. Paul, Palm Beach and Los Angeles, Key Air can deliver a more efficient and streamlined alternative to the often congested airports in each of these locations. Key Air’s three FBO facilities include: Key Air NY Metro (OXC) in Oxford, CT; Key Air Twin Cities (ANE) just outside Minneapolis-St. Paul, MN; and Key Air South Florida (FPR) in Ft. Pierce, FL.

Avista Capital Sells Some Marcellus Shale Rights

Avista Capital Partners has agreed to sell around 52,200 net acres of its Marcellus Shale mineral rights to a unit of Reliance Industries Ltd., for $326.6 million. Avista will continue to hold around 70,000 net acres.


Avista Capital Partners, a leading private equity firm, today announced the execution of an agreement by its wholly-owned entity, ACP II Marcellus LLC (”ACPM”), to sell approximately 52,200 net acres of its Marcellus Shale mineral rights in Pennsylvania to a subsidiary of Reliance Industries Limited (”Reliance”) for $326.6 million in cash.

Upon completion of the sale of its Pennsylvania acreage, Avista, through ACPM, will continue to hold a direct interest in approximately 70,000 net acres in the Marcellus Shale region primarily in West Virginia and New York.  This acreage will continue to be developed in partnership with Carrizo through ACPM’s existing joint venture.

In a related announcement, Avista’s joint venture partner, Carrizo Oil & Gas, Inc. (Nasdaq: CRZO), will also sell a portion of its Pennsylvania acreage to Reliance in a separate transaction.  Avista formed its joint venture with Carrizo in December 2008 to focus on the acquisition and development of natural gas properties in the emerging Marcellus Shale play.  Avista said its joint venture with Carrizo will now focus on acquiring and developing acreage prospective for the Marcellus Shale primarily in the states of West Virginia and New York.  Avista’s original $150 million equity commitment to the joint venture to fund the purchase of mineral acreage will remain in place to fund continuing operations.

Robert Cabes, a Partner at Avista, said, “Avista is pleased with the sale of a portion of acreage in the joint venture.  The sale to Reliance will allow Carrizo to team with a respected, well capitalized industry partner in order to accelerate the development of the acreage in central and northeast Pennsylvania.  We look forward to continuing our successful joint venture with Carrizo and enhancing the value of our extensive acreage position in West Virginia and New York.”

The transaction is expected to close by mid – September 2010, subject to certain closing conditions.

J.P. Morgan acted as financial advisor and Akin Gump Strauss Hauer & Feld LLP acted as legal advisor to Avista.

About Avista Capital Partners

Avista Capital Partners is a leading private equity firm with offices in New York, Houston, and London.  Founded in 2005, Avista’s strategy is to make controlling or influential minority investments primarily in growth-oriented healthcare, energy, and media companies.  Through its team of seasoned investment professionals and industry experts, Avista seeks to partner with exceptional management teams to invest in and add value to well-positioned businesses.  For more information, visit www.avistacap.com.

About Carrizo Oil & Gas, Inc.

Carrizo Oil & Gas, Inc. is a Houston-based energy company actively engaged in the exploration, development, exploitation and production of oil and natural gas primarily in the Barnett Shale in North Texas, the Marcellus Shale in Appalachia, the Niobrara Formation in Colorado, the Eagle Ford Shale in South Texas, and in proven onshore trends along the Texas and Louisiana Gulf Coast regions. Carrizo controls significant prospective acreage blocks and utilizes advanced 3-D seismic techniques to identify potential oil and gas reserves and drilling opportunities.  Carrizo also controls large acreage positions in other productive shale resource plays.

About Reliance Industries Limited

Reliance Industries (RIL) is the largest private sector company in India with a current market capitalization of over $71 billion.  It is a global energy leader and one of the largest refining and petrochemical producers in the world.  For the year ended March 31, 2010, RIL reported revenues in excess of US$ 44.6 billion, cash profit of US$ 6.2 billion, net earnings of US$ 3.6 billion and net worth of US$ 30.6 billion.  For more information, please visit RIL’s website at www.ril.com.

C2Call Raises $2 Million

C2Call, a Germany-based provider of free Internet phone services, has raised $2 million in Series A funding. Backers include Draper Investment Co., High-Tech Grunderfonds and KHK Software co-founder Klaus Wecken.


C2Call (http://www.c2call.com) today announced that it has raised $2 million in Series A funding from Draper Investment Company, High-Tech Grunderfonds and Mr. Klaus Wecken, co-founder of KHK Software AG. C2Call will use the funds for expansion into international markets for its FriendCaller service, the first and only free browser-based Internet phone solution that can turn emails, social networks and any Internet-ready device, such as the iPod Touch or iPad, into a phone.

FriendCaller lets anyone make a call by clicking a uniquely assigned link which can be placed in an email, IM, website, blog, Twitter post, Facebook update, or any other social network site. Clicking the link instantly connects the caller to the recipient via the browser, with no download or registration required. FriendCaller connects friends and family instantly – cost-free via the Internet, and for only 2 cents per minute via land lines and cell phones from the US to over 35 countries. C2Call has generated more than $2 million in revenues since April 2010 and has more than 900,000 users, with an additional 15,000 new users a day.

“C2Call has quickly demonstrated that its free browser-based service FriendCaller has all the makings of a game changer,” said Don Plaisted, managing director of Draper Investment Company. “We’re excited to play a role in helping C2Call enable the mass market to benefit from simple, straight-forward and free phone calls via VoIP.”

“We are proud to back such a promising company that is redefining the browser-based phone market,” said Andreas Quauke, investment manager with High-Tech Grunderfonds. “We are confident that in joining this group of investors, we will enable C2Call’s technology to conquer new markets.”

“We’re delighted to work with Draper Co., High-Tech Grunderfonds and Mr. Klaus Wecken as investors because of their proven experience in backing world-class companies,” said Martin Feuerhahn, founder and CEO of C2Call. “Consumers have already made FriendCaller one of the most popular apps in iTunes – ranked in the top 15 free social networking apps.  We now intend to build upon this popularity and extend our lead to enable consumers everywhere to speak freely.”

About Draper Investment Company

Draper Investment Company (http://www.draperco.com) is a global venture capital firm that specializes in investments in early-stage software, telecommunications and information technology companies. Formed to diversify the Draper family investing initiatives, Draper Investment Company is funding global technology companies of tomorrow and helping them to achieve maximum potential through contacts, advice and support. At the same time, Draper provides its portfolio companies assistance in the areas of strategy, executive team recruiting, operational execution and raising capital.

About High-Tech Grunderfonds

The High-Tech Grunderfonds (www.en.high-tech-gruenderfonds.de) invests risk capital in young, high-potential technology companies that convert promising research results into business success. With seed financing, start-ups work in research and development on a prototype or a “proof of concept,” or until they launch in a specific market. The High-Tech Grunderfonds has euro 272 million under management. Investors of the Public Private Partnership are the German Federal Ministry for Economy and Technology, the KfW Banking Group and six industrial groups: BASF, Deutsche Telekom, Siemens, Robert Bosch, Daimler and Carl Zeiss.

About C2Call

C2Call (www.c2call.com) is the first company to offer free Internet phone calls to anyone, without the need to download software or register. C2Call’s FriendCaller is the first and only Internet phone solution that lets anyone make a free call by clicking a link sent via email, IM, social networks, blog or website. C2Call was founded in 2008 by CEO Martin Feuerhahn and CTO Michael Knecht, founders of Actai Networks, the mobile Internet solutions development company. C2Call is a venture-backed company that has generated more than $2 million in revenue since April 2010.

C2Call can be found online at: http://www.c2call.com; on Twitter at: http://twitter.com/friendcaller

Stu Bohart Leaves Morgan Stanley for Fortress

Stu Bohart has joined Fortress Investment Group as president of liquid markets and senior managing director of strategy. He previously was co-head of Morgan Stanley Investment Management.


Fortress Investment Group LLC (NYSE: FIG) today announced that Stuart Bohart will join the firm as President of Liquid Markets and Senior Managing Director—Strategy of Fortress Investment Group. Mr. Bohart will become a member of Fortress’s operating and management committees, and will have responsibility for all non-investment activities of the firm’s Liquid Markets business.

“Stu brings a unique depth of experience to our organization, having built and managed one of the industry’s largest alternatives platforms, and his addition to our leadership team will allow us to achieve two important objectives,” said Fortress Chief Executive Officer, Daniel Mudd. “First, as President of Liquid Markets, Stu will immediately take on management responsibility for running the business, which will allow Michael Novogratz and Adam Levinson, Co-CIOs of our Macro funds, and Bill Callanan, CIO of our Commodities Funds, to focus exclusively on investments. This has been a key corporate objective. Second, Stu will play a key role identifying and executing on strategic opportunities to build our business. I am confident that Stu’s contributions will help drive continued, meaningful progress at Fortress.”

“We are very pleased that Stu will be joining the leadership team of our Liquid Markets business,” said Novogratz. “We believe that there are significant opportunities to expand the investment themes and product offerings of our business and, more broadly, to execute a plan for long-term, measured strategic growth. Stu will lead our efforts on that front, while also taking on responsibility for all non-investment activities in the business, which includes ensuring that we maintain a best in class approach to servicing our investors. We are excited that Stu will be joining our team, and are confident that his contributions will benefit our investors and the achievement of our long-term strategic objectives.”

Since 1997, Mr. Bohart held positions of increasing responsibility at Morgan Stanley, most recently as Co-Head of Morgan Stanley Investment Management (“MSIM”), a $400 billion AUM asset management complex spanning hedge funds, private equity, real estate, infrastructure, public equity, fixed income, cash management and Fund of Funds. In this role, Mr. Bohart had direct management responsibility for hedge funds, asset allocation, long-only equity and fixed income and Fund of Funds, and served as Chief Investment Officer of Equities and Chair of the MSIM Risk Committee. Previously at Morgan Stanley, Mr. Bohart served as Head of Alternatives for MSIM, with responsibilities for hedge fund activity, including the management of FrontPoint Partners and stakes in Avenue Capital, Traxis Partners and Lansdowne Partners. He also served for two years as Global Head of Morgan Stanley Prime Brokerage, a leading prime brokerage business serving hedge funds and traditional investment managers. He joined Morgan Stanley in 1997 as a portfolio manager in Morgan Stanley Asset Management, and later served as portfolio manager for a long/short equity fund at FrontPoint Partners, a wholly-owned subsidiary of Morgan Stanley.

About Fortress

Fortress is a leading global investment manager founded in 1998. Fortress offers alternative and traditional investment products. For more information regarding Fortress Investment Group LLC or to be added to our e-mail distribution list, please visit www.fortress.com.

Barclays PE In Talks To Sell GHD

(Reuters) - Barclays Private Equity is in advanced talks to sell its majority stake in German health services company GHD, Financial Times Deutschland reported, citing GHD manager and part-owner Andreas Rudolph.

A deal may be struck in the first two weeks of September and completed before the end of the year, the newspaper cited Rudolph as saying in its Thursday edition.

Rudolph told the newspaper he had not yet decided whether to keep his GHD stake of more than 35 percent, cut or increase it.

“Everything is possible, from zero to 100 percent,” he said.

GHD will generate almost 300 million euros ($394 million) in sales this year, Rudolph said.

The company offers health services including transport and storage of pharmaceuticals and medical equipment, nutrition consulting for cancer patients and infusion therapies.

Barclays Private Equity (BARC.L) was not immediately available for comment. (Reporting by Maria Sheahan and Philipp Halstrick)

Prov Equity Begins Discussing New Fund

Aug 4 (Reuters) - Private equity firm Providence Equity Partners has had initial talks with investors about raising a new global private equity fund which could be up to $8 billion in size, a source familiar with the situation said on Wednesday.

The private equity firm has mostly invested its last major buyout fund, raised in 2007, according to a recent report by London-based private equity research firm Preqin. Preqin’s report said that as of March 31 Providence had invested about 70 percent of the fund.

Providence, which focuses on media and communications deals, has been active on the deal front this year. One of Providence’s subsidiaries, Altegrity recently bought Kroll Inc in a $1.13 billion deal, and Providence also recently bought education provider Study Group for $570 million.

The private equity firm has not yet sent a private placement memo (PPM) about the fund to investors, the source said, and no official target has yet been decided. Firms send out PPMs to detail investment plans prior to launching funds.

Providence could not be immediately reached for comment.

The news was first reported by Bloomberg.

Private equity firms raise capital from investors such as pension and endowment funds, and commit to investing that capital in a certain period of time, typically five years.

Finding places to invest money has been a challenge as the credit crisis restricted access to cheap financing for deals and the economic outlook was grim.

Buyout firms typically buy companies using a high level of debt, meaning that when financing dries up, it is hard for them to strike deals. (Reporting by Megan Davies; Editing by Richard Chang)

Sun Capital Buys Betts

Sun Capital Partners has acquired Betts, a provider of printed laminate tubes for the oral care and personal care sector. No financial terms were disclosed.


We are pleased to announce that an affiliate of Sun Capital Partners, Inc. has acquired Betts, a leading producer of printed laminate tubes for the oral care and personal care sector. The purchase price was bridged by an affiliate of Sun Capital Partners, Inc.

Betts operates manufacturing facilities in Mexico, England, Poland, Indonesia and India supplying over 2.0 billion tubes to customers in more than 45 countries. As one of the largest companies to focus solely on laminate tubes, Betts has become a preferred supplier to the world’s leading fast moving consumer goods companies and a wide range of regional customers. With revenues of approximately £80.0 million, Betts is headquartered in the UK and has approximately 1,900 employees.

About Sun Capital: Sun Capital Partners is a leading private investment firm focused on leveraged buyouts, equity, debt and other investments in market-leading companies that can benefit from its in-house operating professionals and experience. Sun Capital affiliates have invested in over 230 companies worldwide since inception in 1995, with combined sales in excess of $40 billion. Sun Capital has offices in Boca Raton, Los Angeles and New York, and affiliates with offices in London, Paris, Frankfurt, Luxembourg, Shanghai and Shenzhen.

Iron Will Innovations Raises $3 Million

Iron Will Innovations, developer of a “glove” that helps wearers control games and applications, has raised $3 million in Series A funding. It also announced that it has begun raising $2 million in Series B funding. No investor information was disclosed.


Iron Will Innovations, the think tank founded to bring revolutionary interface technologies to the global market, today announced the successful close of a $3MM Series A round of private funding. This initial funding enabled the company to engineer, manufacture, and launch their debut product, the Peregrine  Glove.

As the company moves into its next phase of growth, Iron Will Innovations has opened a Series B round, with over $2MM in private funds successfully closed thus far. The new capital will allow the company to expand marketing and distribution of the existing Peregrine product and prepare their next generation Peregrine glove which will open up other industries and applications.

In preparation for the next phase of corporate growth, Iron Will Innovations has installed a new C-Level management team. Brent Baier, founder and current CEO, will transition into a new role as CTO, where he will lead the development and evolution of the company’s product line. Current COO Tim Barrett will become the new CEO and Dale Flint the new COO.

“What begin as a groundbreaking idea to change the way we interact with technology has evolved into a fully realized product, and I am pleased to see our funding progressing to fuel our next stage of growth,” said Brent Baier, founder and CTO of Iron Will Innovations. “We have continued successfully raising capital during some very tough macroeconomic times, which I believe to be a great indicator of the market’s excitement over our product.  As we prepare to move into the next phase of our company’s growth I am pleased to welcome Tim Barrett as our new CEO. Tim has led multiple companies to success, and his strong track record bodes very well for the future of Iron Will Innovations.”

To find out more about Iron Will Innovations, visit: http://www.ThePeregrine.com.

About Iron Will Innovations
Iron Will Innovations is a think tank founded to bring revolutionary interface technologies to the global market. Based in Lloydminster, Alberta and Palo Alto, California, the company works tirelessly to imagine, engineer and deliver game-changing products for consumers and partners.

About The Peregrine
The Peregrine is a new way to control games and applications: it is a seamless, customizable input device that you wear on your hand in order to better control increasingly complex PC games and programs. It is designed to replace or, in some cases, augment the keyboard for game play. The Peregrine is an intuitive, comfortable way to gain an edge, taking advantage of the most powerful tool we have – the human hand. The Peregrine was developed by Iron Will Innovations, Inc., a think tank formed to bring game-changing products to the global market. With an innovative culture, IWI aims to empower people everywhere with products like The Peregrine, and change the way the world interacts with technology. For more information, visit http://www.ThePeregrine.com and follow us on Facebook at http://www.facebook.com/ThePeregrineGamingGlove and Twitter at http://twitter.com/ThePeregrine

Prospect Partners Recaps Navix Diagnostics

Prospect Partners has sponsored a recapitalization of Navix Diagnostics Inc., a Taunton, Mass.-based provider of outsourced cardiovascular diagnostic services. No financial terms were disclosed. www.prospect-partners.com

Gordman’s Prices Low IPO

(Reuters) - U.S. discount retailer Gordmans Stores Inc (GMAN.O) priced shares in its initial public offering below the expected range on Wednesday, according to an underwriter.

The company sold 5.4 million shares for $11 each, raising about $58.9 million. It had planned to sell shares for $13 to $15 each.

Omaha, Nebraska-based Gordmans sells clothing and household goods for as much as 60 percent off and had 68 stores as of June 4. Net sales rose 19.7 percent to $111.9 million in the 13 weeks ended May 1 compared with a year earlier. Net income rose 75.5 percent to $6.4 million in the same period.

Gordmans is owned by private equity firm Sun Capital Partners Inc, whose other holdings include Gerber Childrenswear and Limited Stores. Sun Capital expects to own between 67 percent and 71 percent of the company’s common stock after the IPO.

Underwriters were led by Piper Jaffray and Wells Fargo Securities. The shares are expected to begin trading on the Nasdaq on Thursday under the symbol “GMAN.” (Reporting by Clare Baldwin, editing by Leslie Gevirtz)