MidOcean Partners Buys Allant Group

MidOcean Partners has acquired The Allant Group, a New York-based provider of marketing optimization solutions for the Fortune 100. The deal is being done in partnership with Allant management.

MidOcean Partners (“MidOcean”), a leading private equity firm with offices in New York and London, in combination with Allant management, announced today that it has acquired The Allant Group, a leading provider of marketing optimization solutions that combines database management, analytics and predictive intelligence to maximize targeted marketing solutions for its growing list of Fortune 100 clients.

“We have been following the developing trends in the marketing services space for several years and became increasingly impressed with Allant, its market leadership position, and its prospects for continued growth,” said Frank Schiff, Managing Director of MidOcean. “Discussions between our firms began more than three years ago, and we believe that Allant has all the right ingredients to become the top provider in the marketplace.”

Frank Sowinski, a former President of Dun & Bradstreet and member of the MidOcean team who will serve as Allant’s Vice Chairman added, “Allant’s emphasis on analytic-driven multi-channel marketing solutions, integrated inbound and outbound marketing technologies, performance measurement and advanced advertising solutions are extremely well aligned with the demands of large scale marketing organizations.”

The company is rated among the top marketing service providers by Forrester Research, whose latest Vendor Summary on Allant stated, “In the two years since we last evaluated database marketing service providers, The Allant Group has honed its delivery of analytically and strategically led database engagements. Allant targets enterprise opportunities in select industries, and its integrated service and high customer satisfaction translate into notable market momentum. Clients describe its service delivery as very open, flexible, and responsive, and the company is a strategic partner for senior-level marketers within its client base.”1

Terry McCarthy, President & CEO of Allant commented, “We are excited to have MidOcean join the Allant team as an active partner in driving our vision, growth strategy and delivery of best practices. Our collective goal is to deliver measureable value for clients through a balance of innovation and discipline. We are actively investing in our multi-channel delivery infrastructure, talent base, account management practice and performance measurement capabilities to drive our clients’ results and further expand Allant’s business.”

In the past year Allant has significantly expanded its solution footprint for Fortune 100 clients whose needs span analytic, consulting and technology driven solutions. In addition to its direct mail, Web, email and call center expertise, Allant has established itself as a leading provider in advanced TV advertising. The company has a prestigious base of clients in the cable, financial services, insurance, retail, telecom and teleservices industries.

About Allant
Allant is a leading Marketing Service Provider of integrated online and offline multi-channel database marketing solutions driven by best in class analytic, technology and marketing strategy capabilities. Founded in 1984, Allant has built core competencies in data management, database services, analytics and strategy which are delivered by highly skilled professionals. For more information on Allant and its products, services and solutions, call 800.367.7311 or visit Allant online at www.allantgroup.com.


Southern Cross, Evercore Buying Mexican Homebuilder

Southern Cross Group and Evercore Mexico Capital Partners have agreed to acquire Mexican hmebuilder Servicios Corporativos Javer, for an undisclosed amount. The deal is expected to close next month, pending regulatory approvals.

Southern Cross Group, Evercore Mexico Capital Partners (jointly the “Funds”) and Servicios Corporativos Javer, S.A.P.I de C.V. (”Javer” or the “Company”) announced today that they have signed an agreement by means of which the Funds acquire a controlling interest in the Company.

This transaction allows Javer, leader in the Mexican homebuilding sector, to incorporate strategic partners with proven financial and operating experience throughout the region. Javer, which plans to build more than 17,500 homes in 2009 and has land reserves in excess of 100,000 units, is one of the fastest growing developers of homes in the low, middle and residential segments in Mexico.

“The operating experience, strategic thinking and regional view of our new shareholders will contribute towards further consolidating Javer’s growth as we work towards becoming one of the country’s leading homebuilders and consider accessing the public equity markets,” stated Salomon Marcuschamer, founder of Javer.

This transaction does not involve any changes in the Company’s management, operating team or strategy. Roberto Russildi and Eugenio Garza, CEO and CFO respectively, will continue heading the Company’s operations as they, and the rest of the senior management team, have agreed to sign long-term employment contracts with incentives tied to the performance of the Company.

Salomon Marcuschamer, who will serve as Javer’s Honorary Chairman, will remain actively involved in the management of the Company particularly with respect to land acquisition and development. The Board of Directors will also include Ricardo Rodriguez, Cesar Perez Barnes and Sebastian Villa from Southern Cross Group, Pedro Aspe and Alfredo Castellanos from Evercore, Fernando Alvarez Neila, Joe Ackerman and independent board members to be appointed shortly after the closing. Ricardo Rodriguez will act as Chairman of the Board.

The new partners have a long-standing track record of achieving extraordinary investment returns by focusing on improving the operations of their portfolio companies while operating within very conservative leverage structures. The Funds do not intend to implement any fundamental changes in Javer’s overall business or financial strategy, especially with respect to leverage and dividend policies as the intention is to re-invest free cash flow to maximize growth. The transaction does not involve any modification of the cash balance or financial position at Javer.

Cesar Perez Barnes, Managing Director of Southern Cross, stated, “The incorporation of an investor group with long-standing, proven experience in the region will contribute significantly to consolidate the institutionalization of management and corporate governance procedures. We believe our capabilities perfectly complement Javer’s vision and that, together, we will continue maximizing the Company’s value within a general context of growth in the Mexican homebuilding sector.”

Homebuilding in Mexico is approximately a US$ 20 billion industry with annual demand for homes in excess of 800,000 units with over 720,000 mortgages granted each year(1).

“Our investment in Javer relies on solid fundamentals, in one of the most relevant sectors of the country’s economic activity. The market knowledge and business expertise of Javer’s executive management have allowed it to become a leader in the sector and is a testament of the company’s competitive position,” declared Pedro Aspe, Co-Chairman of Evercore.

Roberto Russildi, Javer’s CEO commented on the transaction, “At Javer we are honored by the fact that such well recognized investment firms chose to join us in what we foresee to be an unparalleled market opportunity. It is a true vote of confidence to what the company and our team have achieved to date. Their participation, together with that of Mr. Marcuschamer, provides a tremendous sponsorship umbrella that will guide us as we execute our business strategy which includes titling in excess of 45,000 homes over the next couple of years.”

The closing of this transaction, which is expected in November of this year, will require approval from Mexican regulatory authorities.

(1) Industry figures according to Infonavit and Softec; does not include the Vacational segment.

Southern Cross Group, a leading private equity fund in Latin America founded in 1998, has offices in Argentina, Brazil, Chile, Mexico and the United States. Its companies are worth more than $1.5 billion dollars and participate in various economic sectors such as retail, pharmaceutical, personal care products and household production, oil and gas exploration, hospitality, food distribution, generation thermal power, natural gas distribution and water services. Of its more than 20 transactions, the best known in the Mexican market include the acquisition of MMCinemas, the sale of Telex-Chile to Telmex, the sale of Construmega to Cemex and development of MorePharma. For additional information please visit: www.southerncrossgroup.com

Mexico Evercore Capital Partners is the private equity division of Protego and manages more than $125 million dollars. Its first investment was More Pharma; the investment in Javer will represent the second joint venture in Mexico Evercore Capital Partners with Southern Cross Group. Protego, founded in 1996 by Pedro Aspe, is a leader in investment banking advice. In 2006 it merged with Evercore, a leading US investment banking and investment management firm. Evercore has a presence in New York, Los Angeles, San Francisco, Boston, DC, Houston, London, Mexico City, Monterrey, Japan, Brazil, France and China. Other private equity investments in which Protego has participated are Volaris, Ike Assistance and Lipu.

Javer, based in Monterrey, Nuevo Leon, was founded in 1973 by Salomon Marcuschamer. It is one of the largest developers of low-income homes in Mexico. The company has a 19% market share in loans granted by Infonavit in the State of Nuevo Leon. It plans to build over 17,500 houses in 2009 and has land reserves in excess of 100,000 units. The company provides strong social support to the communities in which it participates through the installation of schools, medical centers, and sports complexes.


This press may include forward-looking statements. These forward-looking statements include, without limitation, those regarding Javer’s future financial position and results of operations, the Company’s strategy, plans, objectives, goals and targets, future developments in the markets in which Javer participates or are seeking to participate or anticipated regulatory changes in the markets in which Javer operates or intends to operate.

Javer cautions potential investors that forward looking statements are not guarantees of future performance and are based on numerous assumptions and that Javer’s actual results of operations, including the Company’s financial condition and liquidity and the development of the Mexican mortgage finance industry, may differ materially from the forward-looking statements contained in this press release. In addition, even if Javer’s results of operations are consistent with the forward-looking statements contained in this press release, those results or developments may not be indicative of results or developments in subsequent periods.

Important factors that could cause these differences include, but are not limited to: risks related to Javer’s competitive position; risks related to Javer’s business and Company’s strategy, Javer’s expectations about growth in demand for its products and services and to the Company’s business operations, financial condition and results of operations; access to funding sources, and the cost of the funding; changes in regulatory, administrative, political, fiscal or economic conditions, including fluctuations in interest rates and growth or diminution of the Mexican real estate and/or home mortgage market; increases in customer default rates; risks associated with market demand for and liquidity of the notes; foreign currency exchange fluctuations relative to the U.S. Dollar against the Mexican Peso; and risks related to Mexico’s social, political or economic environment.


Apollo Completes Parallel Petroleum Tender Offer

Apollo Global Management has completed its tender offer for all of the outstanding shares of common stock Midland, Texas-based Parallel Petroleum Corp. (Nasdaq: PLLL). The total deal is valued at approximately $438 million, or $3.15 per share, including the assumption or repayment of around $351 million in debt. Apollo’s equity commitment is $283.2 million.


Parallel Petroleum Corporation (“Parallel”), PLLL Acquisition Co. and PLLL Holdings, LLC, entities formed for the purpose of acquiring Parallel Petroleum Corporation (NASDAQ: PLLL) and wholly owned subsidiaries of an affiliate of Apollo Global Management, LLC, today announced the completion of the tender offer for all of the outstanding shares of common stock of Parallel, including the associated preferred stock purchase rights (collectively, the “Shares”).

The initial offering period and withdrawal rights expired at 12:00 midnight, New York City time, on Thursday, October 22, 2009. Computershare Trust Company, N.A., the disbursing agent for the tender offer, has advised that a total of approximately 35,244,824 Shares were validly tendered and not withdrawn (including approximately 802,359 Shares subject to guaranteed delivery) prior to the expiration of the initial offering period, representing approximately 84.62% of the outstanding Shares. In accordance with the terms of the tender offer, PLLL Acquisition Co. accepted for payment all Shares that were validly tendered and not withdrawn prior to the expiration of the tender offer, and payment for such Shares will be made promptly in accordance with the terms of the tender offer.

PLLL Acquisition Co. and PLLL Holdings, LLC announced today that they would make available a subsequent offering period commencing immediately and expiring on Thursday, October 29, 2009 at 5:00 p.m., New York City time for all the Shares not tendered into the offer prior to the initial expiration date. During the subsequent offering period, PLLL Acquisition Co. will accept for payment and promptly pay for the Shares as they are tendered. Stockholders who tender Shares during such period will receive the same $3.15 per Share price, without interest and subject to applicable withholding taxes, that was paid in the tender offer. Procedures for tendering Shares during the subsequent offering period are the same as during the initial offering period with two exceptions: (1) Shares cannot be delivered by the guaranteed delivery procedure and (2) pursuant to Rule 14d-7(a)(2) under the Securities Exchange Act of 1934, as amended, Shares tendered during the subsequent offer period may not be withdrawn.

During the subsequent offer period, Parallel may issue Shares to PLLL Holdings, LLC at a price of $3.15 per Share in accordance with the terms of the merger agreement by and among PLLL Acquisition Co., PLLL Holdings, LLC and Parallel, dated as of September 15, 2009 (as amended, the “Merger Agreement”). These Shares, when added to the number of Shares owned by PLLL Acquisition Co. as a result of the initial offer period and the subsequent offer period, may result in PLLL Acquisition Co. owning more than 90% of the number of shares of Parallel common stock then outstanding. In such case, PLLL Holdings, LLC and Parallel would effect the merger in accordance with the short-form merger provisions of the Delaware General Corporate Law, without prior notice to, or any action by, any Parallel stockholder.

PLLL Acquisition Co. and PLLL Holdings, LLC reserve the right to extend the subsequent offering period in accordance with applicable law and the terms of the Merger Agreement. After expiration of the subsequent offering period, PLLL Acquisition Co. will acquire all of the remaining outstanding Shares by means of a merger under Delaware law. As a result of the purchase of Shares in the tender offer, PLLL Holdings, LLC has sufficient voting power to approve the merger without the affirmative vote of any other Parallel stockholder. In the merger, each Share not previously purchased in the tender offer will be converted, subject to appraisal rights, into the right to receive the same $3.15 per Share price, without interest and subject to applicable withholding taxes, that was paid in the tender offer. After the merger, Parallel will be a wholly owned subsidiary of PLLL Holdings, LLC and Parallel’s common stock will cease to be traded on the NASDAQ Global Select Market.

About Apollo

Apollo is a leading global alternative asset manager with offices in New York, Los Angeles, London, Singapore, Frankfurt and Mumbai. Apollo had assets under management of over $38 billion as of June 30, 2009 in private equity and credit-oriented capital markets funds invested across a core group of industries where Apollo has considerable knowledge and resources.

About Parallel Petroleum Corporation

Parallel Petroleum Corporation is an independent energy company headquartered in Midland, Texas, engaged in the exploitation, development, acquisition and production of oil and gas using 3-D seismic technology and advanced drilling, completion and recovery techniques. Parallel’s primary areas of operation are the Permian Basin of West Texas and New Mexico, North Texas Barnett Shale, Onshore Gulf Coast of South Texas, East Texas and Utah/Colorado. Additional information on Parallel is available via the internet at www.plll.com.


Petra Capital Backs Medical Documentation Co.

Superior Global Solutions, a Dallas-based provider of medical documentation, has raised $6 million of preferred stock and subordinated debt from Petra Capital Partners.


Petra Capital Partners, a private equity firm based in Nashville, Tennessee, today announced a $6 million investment in Superior Global Solutions (“SGS”). The capital is a combination of subordinated debt and preferred stock. SGS marks Petra’s fourth investment in 2009 and sixth investment from its newest fund, Petra Growth Fund II, L.P. Based in Dallas, TX, SGS is a leading provider of medical documentation, coding and technology enabled services to many of the largest hospitals and health systems in the country. SGS used a portion of the proceeds to buyout a minority shareholder and to make a strategic technology acquisition. Petra Managing Partner, Mike Blackburn, and Petra Venture Partner, David Fitzgerald, will join SGS’s Board of Directors.

“We’re excited about Petra Capital Partners’ deep experience working with healthcare services and technology companies and the opportunity to work with their talented team of professionals,” said Greg Hackney, Chief Executive Officer of SGS. “Petra has an outstanding track record of partnering with founding management teams to create valuable businesses. We view Petra as an ideal partner for SGS as we continue our focus on providing our hospital clients with technology and services that help them operate more efficiently.”

David Fitzgerald commented, “Hospitals and health systems are searching for technology enabled solutions that lower costs, improve workflows and accelerate the revenue cycle. SGS addresses these issues by providing its clients with a bundled solution, comprised of professional services and innovative technology. We are pleased to have the opportunity to partner with such an outstanding management team and look forward to helping SGS achieve its growth plans.”

About Superior Global Solutions

Based in Dallas, TX, Superior Global is a nationwide supplier of technology and outsourced services for the medical documentation and coding industries. Our sophisticated technology streamlines the transcription and coding processes and identifies clinically relevant information from medical records, allowing our clients to reduce costs and better manage their revenue cycles. Superior Global’s people and technology work closely together to deliver the highest-quality healthcare documentation, coding and document analysis solutions possible

About Petra Capital Partners

Petra Capital Partners, LLC is a private equity firm based in Nashville, Tennessee. The firm is actively investing its second SBIC fund, Petra Growth Fund II, which has $160 million of available capital to invest. Its previous funds under management total $130 million. Petra provides non-control subordinated debt and/or preferred stock to high growth companies for expansion, acquisition, buyout, refinancing or recapitalization in partnership with the founding management team. Petra seeks to invest up to $15 million in growth companies that possess a minimum of $10 million in revenue and positive EBITDA at the time of investment. The fund targets business, healthcare and information technology services companies. For more information, please visit Petra’s website at www.petracapital.com or call (615) 313-5999.


TA-Backed e-Rewards Buying Research Now

e-Rewards Inc., a Dallas-based provider of online market research panels, has agreed to acquire Research Now PLC, a UK-based online fieldwork and panel firm that is publicly traded on London’s AIM. The deal is valued at over £85 million. TA Associates last year acquired a minority stake in e-Rewards, in exchange for a $60 million investment.

e-Rewards, Inc., the United States’ largest online market research panel provider, today announced it has reached an agreement on the terms of a Recommended Acquisition of Research Now PLC, one of the research industry’s leading international online fieldwork and panel firms. Research Now, an independent public company listed on the AIM market of the London Stock Exchange, will become a wholly owned subsidiary of e-Rewards, Inc. upon completion of the transaction.

Beneficial Combination For Market Researchers

“The acquisition of Research Now by e-Rewards represents the coming together of two well regarded companies to form a truly global firm that will be well positioned to serve the online panel needs of the market research industry,” said Hal Brierley, Chairman and CEO of e-Rewards, Inc. “This is extremely good news for clients of both e-Rewards and Research Now since the merger will offer clients expanded global reach, coupled with outstanding customer service and panel quality.”

“The entire management team of Research Now is excited about the opportunity to join forces with e-Rewards,” said Chris Havemann, Chief Executive of Research Now. “This transaction is consistent with the vision that all of us at Research Now have had from day one — to become the recognized global industry leader for quality one-stop shopping for International Online Fieldwork and Panels.”

Senior Leadership Of Combined Company

Hal Brierley, currently the Chairman and CEO of e-Rewards, will continue to serve as the Chairman of the Board. Chris Havemann, currently the Chief Executive of Research Now, will serve as the CEO. “Chris has a proven track record leading a rapidly growing global company that has been customer-focused and has a reputation for consistently delivering high quality service to its clients around the world,” said Hal Brierley.

Business As Usual Until Transaction Complete

“While we are excited about how well our combined organizations will be able to serve researchers on completion of the acquisition, the two companies will continue to operate independently until the transaction is completed,” explained Hal Brierley.

About e-Rewards, Inc.

e-Rewards, Inc., based in Dallas, Texas, is the world’s largest “by-invitation-only” online research panel provider, serving nearly 1,000 market research clients. With millions of participating panelists, the e-Rewards® Opinion Panels provide research firms with quality respondents — enabling them to interact with real consumers and business decision-makers in a timely manner. Launched in 1999, and named by Inc. magazine as one of America’s fastest growing companies for the past three years, e-Rewards employs more than 350 professionals located in Dallas, London, Los Angeles, New York, San Francisco, Chicago, Seattle, Paris and Frankfurt. For more information, visit www.e-rewardsresearch.com.

e-Rewards is being advised by Jefferies & Company, Inc. on this transaction. Jefferies is a global securities and investment banking firm providing clients with capital markets and financial advisory services, institutional brokerage, securities research and asset management.

About Research Now, PLC

Research Now is one of the leading international online fieldwork and panel specialists to the global market research industry and some of the world’s best known companies with offices in London, Paris, Hamburg, Frankfurt, Munich, Athens, New York, San Francisco, Chicago, Los Angeles, Dallas, Toronto, Sydney, Melbourne, Auckland, Singapore and Shanghai. Research Now operates 36 proprietary, research-only online panels across Europe, the Americas and Asia-Pacific which are used by leading research agencies and some of the world’s best known companies. Research Now is an independent public company traded on the AIM market of the London Stock Exchange. For more information, visit www.researchnow.co.uk.


Capmark Financial Files for Bankruptcy

NEW YORK (Reuters) - Commercial real estate company Capmark Financial filed for bankruptcy protection on Sunday, weighed on by declines in the sector and a heavy debt load related to its leveraged buyout.

Capmark, which was created out of the commercial real estate assets of General Motors’ finance arm GMAC in March of 2006, had indicated earlier this year that it might file for bankruptcy.

It had said that it was negotiating with lenders, bondholders and the Federal Deposit Insurance Corp. Its creditors include banks Citigroup (C.N) and JPMorgan Chase (JPM.N).

The move wipes out the private equity investments of Kohlberg Kravis Roberts & Co [KKR.UL], Goldman Sachs Group’s (GS.N) Goldman Sachs Capital Partners and Five Mile Capital, which bought Capmark for $1.5 billion in cash and more than $7 billion in debt.

According to the bankruptcy filing, the group owned 75.4 percent of the company while GMAC, or the General Motors Acceptance Corp, owned 21.3 percent. Employees and directors owned most of the remaining stock. Equity investors are typically wiped out in bankruptcy.

KKR already wrote down its investment in Capmark to zero earlier this year. KKR has had other failed equity investments this year, including its 2005 purchase of doormaker Masonite, which filed for bankruptcy in March and has since emerged from court.

In order to raise cash, the company signed a deal in September to sell its loan servicing and mortgage business to Berkshire Hathaway (BRKa.N) and Leucadia National (LUK.N) for $490 million. That deal can still take place in bankruptcy.

Capmark listed $20.1 billion in assets and $21 billion in liabilities as of June 30, 2009 in the bankruptcy filing, which was made in U.S. Bankruptcy Court in Wilmington, Delaware.

(Reporting by Caroline Humer; Editing by Richard Chang)


Energy Future Debt Swap Gets Few Takers

NEW YORK (Reuters) - Energy Future Holdings has extended the deadline on a massive debt exchange after getting just a fraction of the participation it had sought, the company said in a statement on Friday.

Bondholders have offered to swap just $351 million of debt as of Thursday, out of $12.15 billion that was eligible for exchange. The deadline has been extended to Nov. 10 from Nov. 3, the company said.

Formerly known as TXU, Energy Future has been trying to restructure some of its $43 billion debt load, much of it taken on for its 2007 leveraged buyout by Kohlberg Kravis Roberts & Co and TPG Capital — the largest LBO ever.

The small participation was a major victory for bondholders, including Franklin Templeton Investors, who had organized to block the exchange after being offered as little as 46.5 cents on the dollar to swap their debt.

Bondholders believed the discounts were too steep now that the bond markets have recovered from a selloff earlier this year, a source close to the group said. Energy Future is also expected to report strong earnings on Oct. 30, potentially lifting the value of its bonds, the source said.

While the debt swap is hanging over the market, however, bonds may not trade much higher, the source added.

Energy Future was hoping to reduce its debt load by about $2 billion by swapping $6 billion of outstanding notes for $4 billion of new notes. The company on Friday said it was reducing the maximum amount of new notes to be exchanged to $3 billion.

In addition to the bond discounts, bondholders were opposed to amendments to bond terms Energy Future was seeking as part of the exchange. The changes to terms or covenants would have made it easier for Energy Future to sell its valuable transmission business, Oncor, a person close to the deal said.

Energy Future also on Friday eliminated an early tender deadline and said that all bondholders who swap debt by Nov. 10 will get the same terms. All bondholders are being offered between 46.5 cents and 74.5 cents on the dollar to exchange their debt.

“Bondholders think that they can do better,” said Timothy Doherty, an analyst for high-yield research firm KDP Investment Advisors.

The new notes being offered would have given bondholders an improved claim on Oncor assets, but bondholders worried that their security would be weak. Covenants would have allowed Oncor to be sold and the bonds transferred to a different company, analysts said.

Analysts also said the debt exchange would have done little to head off Energy Future’s major debt problem, a looming $23 billion maturing in 2014.

Carl Blake, analyst at independent research firm Gimme Credit, said in a report earlier this month the exchange would have trimmed its total debt by less than 3.5 percent, at best.

“Energy Future Holdings is suffering under the weight of an untenable debt load created by an ill-timed leveraged buyout at the top of the market,” Blake said. The debt swap was likely the first step in a multistage restructuring of the company’s capital structure, he added.

By Dena Aubin


peHUB Second Opinion 10.23

Catchy: The return of the Why-P.O. (The Reformed Broker via Abnormal Returns)

Analysis: Amend & Extend, as told to Bloomberg. peHUB also covered this portfolio company saving move here and here.

Ever Heard of Activist Mezzanine Investors? Neither had I. Here’s one example. (Neal Unmack)

Columbia Business School Admissions Tips: Mary Miller fields questions from potential applicants about getting into the elite MBA program, located in the business capital of the world (BusinessWeek)

Speaking of MBAs: Here’s yet another mildly amusing (if that) white-guys-satirically-rapping-about finance video. It’s about getting into MIT Sloan and paying off your student loans. Hilarity ensues, I’m sure. Did I mention it features auto-tuning and T-Pain? (Dealbreaker)

National News: More Americans Falling For ‘Get Rich Slowly Over A Lifetime Of Hard Work’ Schemes (The Onion)

Enjoy the Weekend: Here, Gizmodo’s 48 stunning photos of fall! (Gizmodo)

The Future of Private Equity: Rubenstein was on CNBC:


Private Equity: Creating Side Hustles To Support Crappy Jobs

The question of whether private equity creates or destroys jobs is one for the ages-it’s been hotly debated through all kinds of studies, white papers, surveys, books and conference panels. Fortunately for the already media-battered industry, that debate is not addressed in Michael Moore’s new film about the financial collapse, Capitalism: A Love Story.

But private equity does get one little shout-out in a particularly surprising interview with commercial airline pilots. Moore speaks with several underpaid and overworked pilots who go on food stamps and take second jobs to get by. (Seriously, $17k a year? The second job aspect is particularly scary given this week’s napping pilot incident.) One of the pilots offers that, in order to make ends meet, she sells MonaVie, a healthy juice product that happens to be owned by a portfolio company of TSG Consumer Partners.

The company sells its acai juices in wine bottles for 40 bucks a pop with a direct sales model like that of Tupperware or Avon. A network of independent distributers, which includes Michael Moore’s pilot, sells the products to their peers.

TSG made a “substantial” investment in 2008 and, as of the beginning of this year, watched the company’s annual sales rise by 100%. TSG founder Chuck Esserman believes MonaVie may capture the record for being fastest to $1 billion in sales of any company, according to a profile in Buyouts. I have no idea if selling MonaVie is a profitable side hustle for the independent distributors, but it appears to be panning out as a smart play for TSG.


This Week in Debt Performance

As usual, we have a week’s worth of ratings actions on the debt of LBO-backed companies from ratings agencies Standard & Poor’s Investors Ratings Services and Moody’s Investor Service. This week we’ve got two bankruptcies and even more distressed debt exchanges.

Company: NCI Building Systems
Sponsor: Clayton, Dubilier & Rice
Action: S&P raised its corporate credit rating on Houston-based metal building components manufacturer NCI Building Systems Inc. to ‘B+’ from ‘SD’ (selective default) and affirmed its ‘B+’ issue-level rating on the company’s $150 million senior secured term loan.
Highlight: “The upgrade follows the conclusion of our review of the company’s new capital structure upon completion of its recapitalization,” said Standard & Poor’s credit analyst Thomas Nadramia.

Company: NTK Holdings (Nortek)
Sponsor: Thomas H. Lee Partners
Action: Moody’s lowered the company’ probability of default to D from C following NTK Holdings’ parent’s announcement, Inc. that it and its domestic subsidiaries filed for bankruptcy.
Highlight: Moody’s will withdraw all of Nortek’s ratings shortly

Company: Airborne Health
Sponsor: Summit Partners
Action: S&P withdrew its ‘D’ corporate credit rating on the company.
Highlight: On Oct. 12, 2009, the company was sold to a new entity formed by GF Capital PE Fund. S&P withdrew the ratings at the request of the company.

Company: Harrah’s Operating Co. Inc.
Sponsor: Apollo Management LP and TPG Inc.
Action: S&P lowered its issue-level rating on Harrah’s Operating Co. Inc.’s $9.25 billion senior secured credit facilities and $2.095 billion senior secured notes, and removed the ratings from CreditWatch with negative implications, where they were placed on Sept. 22, 2009. The corporate credit rating on Harrah’s Entertainment Inc. (HET) is ‘CCC+’ and the rating outlook is developing.
Highlight: “The rating reflects the company’s weak credit metrics and limited liquidity. In addition, it reflects our expectation for continued negative trends in net revenues and EBITDA over the next few quarters, which could challenge Harrah’s ability to service its debt obligations given extremely thin EBITDA coverage of interest.”

Company: Stallion Oilfield Services Ltd.
Sponsor: Carlyle Group
Action: Moody’s Investors Service has withdrawn the company’s ratings following its filing for Chapter 11.
Highlight: The last rating action was on September 14, 2009 when Moody’s downgraded Stallion’s CFR to Ca from Caa3, PDR to D from Caa3 and the senior secured debt ratings to B3 from B2.

Company: Advanstar Communications, Inc.
Sponsor: Veronis Suhler Stevenson, New York Life Capital Partners, Citigroup Private Equity, Anchorage Capital Partners
Action: Moody’s Investors Service changed the company’s probability of default rating to Caa2/LD from Caa3 following the closing of a debt for
equity transaction which Moody’s views as a distressed exchange.
Highlight: The upgrade in the Corporate Family Rating to Caa2 reflects an improved capital structure after elimination of $385 million in second lien, mezzanine and subordinated debt. Yet despite the significant reduction in debt, Advanstar remains highly levered at current earnings levels and Moody’s does not expect financial leverage (debt to EBITDA) to fall below 10 times in 2010.

Click to view all past ratings action wrap-ups…


EverBank Buying Tygris Commercial Finance

EverBank Financial Corp., a Jacksonville, Fla.-based financial services firm, has agreed to acquire Tygris Commercial Finance Group, a commercial finance and leasing company. The stock-for-stock transaction is expected to increase EverBank’s capital base by about $470 million. EverBank has raised approximately $100 million in private equity funding from Sageview Capital. Tygris was formed in 2007 with more than $1.75 billion in equity commitments from Aquiline Capital Partners, New Mountain Capital, TPG Capital, Diamond Castle Holdings and Hamilton Lane.


EverBank Financial Corp®, one of the nation’s largest privately-held financial services firms, announced today it has reached a definitive agreement to acquire Tygris Commercial Finance Group, Inc., a commercial finance and leasing company.

The stock-for-stock acquisition will increase EverBank’s capital base by approximately $470 million, and is expected to have a positive impact on earnings.  EverBank’s capital position will be significantly enhanced upon consummation of the acquisition, resulting in expected Tier 1 (core) capital and risk based capital ratios of approximately 11% and 19%, respectively. The acquisition agreement also includes a $65 million pre-acquisition cash investment by Tygris into EverBank designed to provide EverBank with growth capital prior to the consummation of EverBank’s acquisition of Tygris. 

“The Tygris acquisition will provide EverBank with substantial growth capital to continue its successful approach of offering high-credit-quality residential loan and retail deposit products to the “mass affluent” market as well as pursue other strategic acquisition opportunities,” stated Rob Clements, Chairman and CEO of EverBank.  “As a result of EverBank’s deployment last year of approximately $150 million of growth capital, the company has recognized record year-to-date earnings of $26.0 million through the second-quarter of 2009, resulting in earnings growth of 41% over the comparable period in 2008.  We believe that by continuing to pursue attractive lending and deposit opportunities, while offering business leasing products, EverBank can further enhance its financial position and provide competitive lending and banking solutions to customers in the current market environment.”

“As a healthy, growing bank, EverBank was fortunate to be able to consider a variety of potential strategic acquisition opportunities before deciding to partner with Tygris,” stated Blake Wilson, President and CFO of EverBank.  “We chose to partner with Tygris based on the quality of its people, leasing products and platform, and the potential future opportunities available to the combined organization.  By bringing Tygris together with our credit, capital and funding infrastructure, our customers will benefit by having another stable lending source available to them.”

The acquisition, which is expected to close in late 2009, has been approved by both parties’ boards of directors and remains subject to regulatory approvals, among other customary conditions.  EverBank was advised by the law firm of Skadden, Arps, Slate, Meagher & Flom LLP.  Tygris was advised by the investment banking firm of Goldman Sachs & Co. and the law firm of Sullivan & Cromwell LLP.


GenNx360 Capital Buying GVI Security

GenNx360 Capital Partners has agreed to buy GVI Security Solutions Inc. (OTC BB: GVSS), a Carrolton, Texas-based provider of video security surveillance solutions. The deal is valued at approximately $11.6 million, or $0.38 per GVI share.


GVI Security Solutions, Inc., (OTC Bulletin Board: GVSS), a leading provider of video security surveillance solutions featuring the complete Samsung Electronics line of products, announced today that it has entered into a definitive agreement to be acquired and taken private by investment funds managed by GenNx360 Capital Partners, a leading global private equity firm focusing on middle market opportunities.

Under the terms of the merger agreement, an affiliate of GenNx360 will commence a tender offer to purchase for cash all of the outstanding shares of GVI common stock at a price of $0.38 per share, without interest and less any applicable withholding taxes, for a total equity value of approximately $11.6 million. The tender offer is expected to commence on or before November 4, 2009 and to expire on the 20th business day following and including the commencement date, unless extended in accordance with the terms of the merger agreement and the applicable rules and regulations of the Securities and Exchange Commission. Following completion of the tender offer, the parties will complete a second-step merger in which any remaining shares of GVI common stock will be converted into the right to receive the same price per share paid in the tender offer. Stockholders representing approximately 22% of GVI’s outstanding shares have entered into tender and support agreements with GenNx360 in connection with the transaction.

Steven Walin, Chairman of GVI, said, “After careful consideration of our strategic alternatives, we are pleased to have reached this agreement with GenNx360, which creates substantial value for our stockholders. This transaction represents a premium of 22.6% over GVI’s closing share price on October 21, 2009, the last trading day before the merger agreement was signed. GenNx360’s desire to add GVI to its portfolio underscores our solid business model, the talent of our people and the significant progress we have made in transforming GVI into an important market player.”

Lloyd Trotter, a Founder and Managing Partner at GenNx360, said, “We are excited about the opportunity for GenNx360 to enter the security industry supporting the strong GVI platform. The security industry presents attractive growth opportunities and we are looking forward to working with the experienced GVI management team to expand the company’s presence in the marketplace.”

The Board of Directors of GVI has unanimously approved the merger agreement and the transactions contemplated by the merger agreement, based upon, among other factors, the approval and recommendation of a Special Committee of the Board of Directors, and has resolved to recommend that GVI’s stockholders tender their shares of GVI common stock in connection with the tender offer contemplated by the merger agreement. The transactions are subject to customary closing conditions, but are not subject to any financing condition.

Imperial Capital, LLC is acting as financial advisor to GVI and has delivered a fairness opinion to the GVI Board of Directors and Special Committee. Cooley Godward Kronish LLP is legal counsel to GVI and Nixon Peabody LLP is legal counsel to GenNx360 Capital Partners.

About GVI Security Solutions, Inc.

GVI Security Solutions, Inc. (OTC Bulletin Board: GVSS) is a leading provider of video surveillance and security solutions, with sales and service representation throughout North, Central and South America. The company provides Samsung Electronics and GVI branded products, software and services to the Homeland Security and Commercial markets. Customers include governments, major retail chains, leading financial institutions and public and private school systems.


GenNx360 Capital Partners

New York-based GenNx360 Capital Partners is a private equity investment firm focused on industrial business-to-business companies. Our partners have 100+ years of combined global operating experience with a strong, proven track record in creating true enterprise value through operating excellence and strong leadership. We acquire companies with proven and sustainable business models in expanding industries and implement the required operating efficiencies to accelerate growth and generate strong financial returns.



BP Looking at Deal for Kosmos

NEW YORK (Reuters) - BP Plc (BP.L) has had talks with Ghana’s national oil company about a possible joint bid for Kosmos Energy’s stake in the huge Jubilee oilfield off the coast of the country, Bloomberg said on Thursday, citing two people familiar with the matter.

BP has hired Goldman Sachs to advise on the deal, the report said.

Exxon Mobil (XOM.N) agreed to buy the Jubilee stake from Kosmos in early October, Reuters reported, according to three sources close to the matter. Kosmos is backed by private equity groups Blackstone Group (BX.N) and Warburg Pincus.

But state-run Ghana National Petroleum Corp (GNPC) has said the sale is illegal. A GNPC source told Reuters earlier this month that that the firm is interested in buying Kosmos Energy’s stake itself, perhaps selling all or part of that stake later.

Moreover, a leading member of Ghana’s ruling party said last week that the government does not approve of the Exxon deal.

BP declined to comment. Goldman Sachs could not be immediately reached for comment.

Kosmos owns the field with UK-based oil explorer Tullow Oil (TLW.L) and Houston-based Anadarko Petroleum (APC.N). It put its interest in the field on the market earlier this year. (Reporting by Michael Erman; editing by Carol Bishopric)


Private Equity To Tweet, Begrudgingly

Unlike venture firms, where Twittering, blogging, and social networking pretty much come with the territory, private equity firms have been consistent with the “private” part of their names, shying away from the exhibitionism of social networking.

Until today, when an email from buyout firm Huntsman Gay announced that the firm has crossed over to the dark side. I think that’s great news, but don’t get excited, this move was not done enthusiastically–check out the wording on this announcement:

“We’re also working with a number of folks in the broader investment community on Twitter to determine whether it’s a useful real-time communications medium.”

I read that to mean, “We’re doing this even though we think it’s dumb.”

But it’s a reflection of the buyout community as a whole. Earlier this year Dan speculated on the reasons for private equity’s reluctance to take up blogging. It’s obviously no different for other forms of social media. Twitter hasn’t exactly emerged as a tool for real socializing and networking with other buyout professionals. Most PE-related media outlets have twitter accounts, but for good in-the-trenches, day-to-day insights from buyout pros, there’s just a handful. For private equity, Twitter is mostly a link sharing service, which is not all bad either.

Here is the handful of the buyout pros (or at least deal pros) that I found on Twitter (email me if you know of others):

Rich Lawson of Huntsman Gay - @Rich_Lawson

UK private equity house Endless LLP has a sporadic account that’s been up since May: @EndlessLLP

UK Consultant and private equity blogger Matthew Craig-Greene is pretty active: @mattcg

Fred Theil of Triton Pacific Capital Partners tweets, but you have to follow him to read them: @fgthiel His colleague Kirk Mitchie tweets here: @KirkMitchie

Partner at Deutsch Inc. and peHUB Vox Populi Contributer Mike Duda:  @mikeduda

Banker Mark Reiboldt, VP at Coker Capital, tweets here: @markreiboldt

The British Private Equity and Venture Capital Association has an account: @BVCA

There’s also Private Equity Jobs listings from Jobsearchdigest.com: @equityjobs

And Greg Needham of NorthShore Capital Advisors, tweets about middle market M&A at @GregWNeedham

And of course, there’s Dan and the peHUB feed: @peHUB, as well as Deborah Gage: @Deborahgage, Alastair Goldfisher: @agoldfisher, and me: @griffitherin


New Mexico CIO Resigns With Links to Pay-To-Play Scandal

Gary Bland, State Investment Officer of New Mexico State Investment Council, has resigned from his role, a move likely related to his fund’s dealing with recently Saul Meyer, the investment pro who pled guilty to fraud in securities transactions in New York and New Mexico.

In court, Meyer admitted to wrongdoing as an advisor to New Mexico’s pension fund:

Contrary to my fiduciary duty, I ensured that Aldus recommended certain proposed investments that were pushed on me by politically connected individuals in New Mexico. I did this knowing that these politically connected individuals or their associates stood to benefit financially or politically from the investments and that the investments were not necessarily in the best economic interest of New Mexico.

Bland has given no official reason for his resignation. New Mexico governor Bill Richardson issued the following statement:

Governor Richardson has accepted Gary Bland’s resignation and thanks him for his service to New Mexico. The Governor will start the process to name a successor to run the State Investment Office.

We will update with any further developments…


When VC and Buyout Firms Team Up…

WSJ blogger Scott Austin is reporting that Sequoia Capital is a small part of the consortium that has agreed to buy private bank First Republic from Bank of America, for more than $1 billion. Don’t quite know what to say, except that it’s a bit unexpected. Not only because Sequoia doesn’t typically involve itself with buyout deals (save for the Aricent deal with KKR), but because it also isn’t known as much of a financial sector investor.

I’m sure Sequoia is aware that the VC world’s track record with big buyout clubs is mixed (to be kind). The most egregious examples are Battery Ventures with Freescale Semiconductor and Highland Capital Partners with Harrah’s. More recently we had Index Ventures and Andreessen Horowitz partnering up with Silver Lake for Skype – a hairy deal that eBay said yesterday would close in Q4 despite all of its legal challenges.

On the upside, Ampersand Ventures did score a major win by partnering with Cerberus on Talecris Biotherapeutics, while a trio of VC firms — ARCH Venture Partners, 5AM Ventures and Venrock – could still score on their 2007 partnership with New Mountain Capital for Ikaria.

Still, the historical downside is larger than the upside. That doesn’t mean the past will be prologue for Sequoia, but does make the present a bit surprising.


Global Infrastructure Partners Buying Gatwick Airport

Global Infrastructure Partners has agreed to acquire London Gatwick Airport from BAA Airports Ltd., for approximately £1,46 billion.


Global Infrastructure Partners (GIP), an independent $5.64 billion investment fund, announced today that it has reached agreement with BAA Airports Limited to acquire London Gatwick Airport. GIP will be investing through Ivy Bidco Limited (“Bidco”), a limited liability company registered in England, established for the purposes of making the acquisition. Bidco will pay a cash consideration of £1,455 million for the entire share capital of Gatwick Airport Limited on a cash-free, debt-free basis. Bidco has also agreed to make certain additional payments of up to £55 million on a deferred basis, contingent on certain defined targets relating to passenger volume and future capital structure being achieved. Completion is anticipated in the first week of December 2009 and is subject to, among other things, European Union merger clearance.

Adebayo Ogunlesi, Chairman and Managing Partner of GIP commented: “The acquisition of Gatwick is a landmark deal for GIP and adds another quality asset to our portfolio. We see significant scope to apply both our strong operational focus and our knowledge of the airports sector to make Gatwick an airport of choice.”
Michael McGhee, the GIP Partner leading the acquisition, further commented: “We will upgrade and modernise Gatwick Airport to transform the experience for both business and leisure passengers. We plan to work closely with the airlines to improve performance, as we have done successfully at London City Airport.”

GIP’s financial advisers in this transaction were Banco Santander, Credit Suisse, J.P. Morgan and Royal Bank of Canada. Slaughter and May were GIP’s legal advisers.

About Global Infrastructure Partners
Global Infrastructure Partners (GIP), an independent investment fund, invests worldwide in infrastructure assets. GIP targets investments in air transport infrastructure, ports, freight rail, power and utilities, natural resources infrastructure, water distribution and treatment, and waste management. GIP has offices in London, New York, Hong Kong and Sydney and an operations team in Stamford, Connecticut.

GIP has a 75% ownership interest in London City Airport. GIP’s other UK investments are Biffa Limited, a waste management company and Great Yarmouth Port Company. GIP also has investments in other infrastructure businesses in the United States, India and Argentina.


Vicente Capital Sponsors U.S. Dermatology

Vicente Capital Partners has made an equity investment in U.S. Dermatology Medical Management Inc., an Irvine, Calif.-based provider of healthcare services for skin cancer treatment and other medical dermatological conditions. No financial terms were disclosed.


Vicente Capital Partners, LLC announced today that it has completed an investment in U.S. Dermatology Medical Management, Inc. (“U.S. Dermatology”), a nationwide provider of healthcare services for skin cancer treatment and other medical dermatological conditions.

Headquartered in Irvine, CA, U.S. Dermatology was founded by current CEO Ed Rotan for the purpose of acquiring medical (non-cosmetic) dermatology practices throughout the U.S. and increasing revenues at these practices by introducing additional specialized medical services. The company’s management team has extensive experience building multi-site medical services organizations on a national scale. Mr. Rotan will be joined by Rob Mathuny, who brings over 15 years of operating and acquisition experience as a
healthcare CFO to the company.

“We are very excited to be working with the professionals at Vicente Capital,” said Ed Rotan. “Their track record of successfully growing healthcare services businesses into market leaders makes them an ideal partner for U.S. Dermatology and gives us the resources we need to expand our footprint into underserved markets across the country.”

“We’re equally excited to partner with Ed Rotan to build a nationwide platform that can help address the critical and growing need for skin cancer treatment,” said Alain Rothstein, Principal of Vicente Capital Partners. “Ed has a very successful track record of partnering with physicians to build market leading healthcare companies that provide the highest quality patient care.”

Jay Ferguson, Alain Rothstein, and David Casares of Vicente Capital Partners will join U.S. Dermatology’s board of directors.

“U.S. Dermatology represents Vicente Capital’s third investment out of our $165 million growth equity fund which closed in January of 2009,” said Jay Ferguson, Managing Partner of Vicente Capital. “We continue to see interesting investment opportunities in a number of sectors where we have domain expertise, and plan to actively invest in companies where our capital can create value for both management and investors.”

About Vicente Capital Partners
Vicente Capital Partners is a private equity firm specializing in both non-control and control investments in growth businesses that have annual revenues between $5 million and $25 million. The firm’s investment professionals have a long and successful track record of partnering with management teams to create and realize value across a number of different industries including: Business Services (outsourced services, Internet services, telecom services); Consumer Services (healthcare services, residential delivery, education); and Specialty Manufacturing (aerospace & defense, environmental products, networking/telecom equipment).

For more information about Vicente Capital Partners, please visit www.vicentecapital.com.


Vertex Capital Buys Cosmedicine

Vertex Capital Management has acquired skin care products maker Cosmedicine. No financial terms were disclosed. Cosmedicine will change its name to Costru Company LLC


Cosmedicine announced today their relaunch under new ownership, Vertex Capital and corporate name, Costru Company, LLC.

Vertex Chief Operating Officer Larry Nusbaum, an accomplished consumer products executive, has been tapped to rebuild this registered OTC and clinically tested high end brand.

“We see tremendous upside in the coming months for this recognized brand,” states Nusbaum, adding, “We will tailor our proven techniques for successful corporate turnarounds to overcome Cosmedicine’s previous losses by providing a greater focus, bringing the overhead under control, providing better gross margins and increasing distribution.

“We will utilize our direct marketing approach, producing a thirty minute cutting-edge infomercial and short form direct-to-consumer television commercials to increase revenue and build brand awareness, as well as create a continuity and loyalty program designed to support the longevity of the entire product line in retail.”

A well-known celebrity is currently being contracted to serve as spokesperson, with plans to have a commercial on-air for testing in-spot markets nationally by December 2009.

“Our proprietary formulas and technology have been clinically tested and documented as superior to the existing acne and anti-aging category leaders,” Nusbaum explains. “Our marketing campaign will emphasize the features and benefits of our unique brand, clearly illustrating how favorably we compare with other well known products in this category. I am personally energized to tackle this turnaround.”

The core-product lines have been meticulously developed, elegantly packaged and are already distributed in the leading upscale chains such as Sephora, Ulta, Nordstrom’s, and Macy’s.

ABOUT VERTEX: Founded in 2008, Vertex Capital Management LLC (“Vertex”) is a NYC based private equity group. A premier equity investment group focused on making control investments in distressed private companies. Companies currently owned by Vertex also include Ronco Acquisition Corp., Small World, Naturade LLC, and Fitz & Floyd.