American Capital Takes Over The Bar –

Buyout and debt financing firm American Capital Strategies closed out a busy first half of the year with the acquisition of Automatic Bar Controls, a manufacturer and supplier of hand-held beverage dispensers for the food service industry. American Capital invested $35.5 million in the form of a senior term loan, senior and junior subordinated notes and common equity. LaSalle Bank is financing a revolving loan facility. ABC management is rolling over the majority of its equity ownership.

The first-half tally for American Capital: six buyout and five mezzanine debt transactions totaling approximately $250 million.

The latest deal, Automatic Bar Controls, sports a signature product called the Wunder-Bar, a hand-held beverage-dispensing gun. The company also sells food-dispensing systems for condiments, heated cheese, oils, salad dressings, refrigerated and non-refrigerated toppings and pizza sauces. The Vacaville, Calif.-based company, founded in 1971, employs approximately 150 people.

Richard A. Martindale, now the president and CEO of Automatic Bar Controls, and his father founded the company, focusing on liquor dispensing products. In the early 80s, the company introduced the Wunder-Bar. These familiar flexible hose bar guns dispense ingredients that are mixed in the nozzle (post-mix) or after they have been mixed in a tank (pre-mix). They have become the standard for dispensing carbonated and non-carbonated beverages.

Roland Cline, principal and managing director of American Capital, said “because of [its] superior products and high commitment to customer service,” ABC has dominated the U.S. and U.K. flexible hose dispenser market.

In 1987, ABC established a joint venture in Britain with Peak Drink Dispense Ltd. In 2000, ABC acquired a metal production facility to fabricate its stainless steel products. The acquisition enabled ABC to manufacture its Beer Boss systems in-house as well as control quality, reduce costs and pursue significant opportunities for new business.

“One of ABC’s strengths is its long-standing relationships with the world’s premier beverage companies,” Cline noted. “Strong customer relationships are critical for market penetration because beverage providers typically supply drink dispensers to restaurant and bar operators free of charge to secure their exclusive syrup business.”

ABC operates in the $1.3 billion serving equipment sector of the highly fragmented foodservice and supplies industry. Since 1998, growth in this sector has averaged 7.4% annually and is expected to continue

The ABC deals wraps up an active first half for American Capital. To recap the first-half buyouts deals, the firm acquired machining systems manufacturer Precitech in a $21.5 million deal; Warner Power, a manufacturer of power system supplies and electronic ballasts, for $6 million; PaR Systems, a manufacturer and provider of high precision robotic systems, in a $36 million deal; DanChem Technologies, a specialty contract chemical manufacturer, in a $29 million deal; and the Network for Medical Communications and Research, a provider of specialized medical educational programs, in a $22 million deal.

In mezzanine transactions, American Capital committed $13 million to the acquisition of Trinity Hospice, a provider of hospice care; $10.2 million to the acquisition of Alemite Corp., a manufacturer of lubrication equipment and products; $31 million to the acquisition of Hartstrings, a designer, wholesaler and retailer of children’s clothes; and $19.5 million to the acquisition of Stravina, a designer and supplier of personalized novelty and souvenir items.