Atlas Holdings hits market seeking estimated $650 mln for turnarounds

The launch is part of a surge in turnaround and distressed debt fundraising this year as general partners and their backers anticipate that the recovery can’t last forever—at least for some companies. All told Buyouts counted $13.4 billion raised by such specialists through the first three quarters of the year, up from $7.4 billion at the same time a year earlier—see accompanying table. Notable funds in or recently in the market include Aurora Resurgence Fund II LP,which secured the $550 million it was seeking according to an Oct. 18 Form D, and TPG Capital, which has set its sights on raising $2.5 billion for TPG Opportunities Partners III LP.

Atlas Holdings has been in the market raising Atlas Capital Resources II LP, which has an estimated target of $650 million, at least since early October, according to a potential investor who wishes to be anonymous given the sensitivity of the subject. Capstone Partners, a Dallas placement agency which helped raise Fund I, has signed on to help raise the successor as well.

We were unable to learn details of the track record that Atlas Holdings is campaigning on; an executive at the firm did not respond to an email and phone call seeking comment. At the time it closed its first fund in mid-2010, Buyouts reported that the firm had returned an average of four times its invested capital on two full realizations, and scored some partial realizations beyond that. It wasn’t clear if those were all Fund I deals. “In 30 years of doing this, what’s upon us is the most attractive investment period I’ve seen in my career,” Andrew Bursky, now chairman of Atlas Holdings, told Buyouts at the time.

With its first fund Atlas Holdings set out to invest $50 million to $75 million of equity in companies operating in industrial sectors such as building materials, industrial packaging and steel mill services. The firm backs companies undergoing some measure of operational or financial distress, and often buys them through a bankruptcy process or as part of an out-of-court restructuring.

The firm’s second-quarter review of its Fund I portfolio, posted on its website, highlights “positive operating momentum at our portfolio companies,” as well as the close of the acquisition of Twin Rivers Paper Company, a specialty paper and wood products company with operations in Maine and New Brunswick, Canada. In addition, just after the end of the second quarter, portfolio company Detroit Renewable Energy completed an offering of bonds, earmarked in part to finance construction of a Detroit heating pipeline to serve a new industrial customer. In what appeared to be a partial exit, the firm also said that wood products company Wood Resources had agreed after the quarter ended to sell its southeast business, including Chester Wood Products and Moncure Plywood, to Boise Cascade Company.

The second-quarter review gave updates on some 13 companies, including Finch Paper LLC, Forest Resources LLC and Soundview Paper Company LLC. It noted that “among the industrial sectors most relevant to the ‘Atlas Economy,’ the U.S. construction industry continues to recover toward more normalized levels of activity…”

According to its website, Atlas Holdings has 13 investment professionals led by Bursky and Managing Partner Timothy Fazio, who together co-founded the firm in early 2002. The pair had earlier worked together at turnaround shop Pegasus Capital Advisors and, before that, at Interlaken Capital Inc., a private equity shop that focused on value-investing. The website also lists more than 50 operating partners.