Behrman Takes the High-Yield Road –

Just 10 months after Behrman Capital acquired Woodcraft Industries in a $145 million deal, the firm completed a recapitalization that will return more than half of the original equity to the investor group.

Behrman bought Woodcraft in a secondary deal from private equity firm Goldner Hawn Johnson & Morrison, which had controlled the company since 1996. The business is a supplier of outsourced doors and components to the kitchen cabinet and bath vanity space. Its products are marketed under the Woodcraft, PrimeWood and Brentwood names.

Through the recapitalization, Behrman was able to repay the outstanding balance on its existing credit facility, consisting of three term loans and a $15 million revolving credit facility, provided by Antares Capital, Merrill Lynch and Dymas Capital Management. Additionally, and perhaps most significant, the new financing arrangement will generate a distribution of roughly $38 million to the investor group representing over 50% of the initial equity investment.

To refinance the business, Credit Suisse First Boston led a $120 million high-yield offering, which was co-managed by Wachovia Securities, issuing 10% senior unsecured notes due 2012. And concurrent to the high-yield offering, the company obtained a new $25 million senior secured revolving credit facility, again with Antares, but at better terms than the previous facility.

“We wanted to restructure the company’s balance sheet to take advantage of opportunities in the market place and provide a debt structure that provides us with real flexibility going forward,” said Behrman Capital Founder Grant Behrman.

And while the investors were able to get a taste of a return, the recap, by no means, indicates Behrman is seeking an exit quite yet. “It’s still the early days of this investment for us,” Behrman said, adding that a complete exit is still a ways down the road.

With that said, though, the company’s progress thus far was what made the recapitalization such an attractive alternative. For the full-year 2003, the company reported EBITDA of $30 million, on revenue of $174 million, versus year-ago EBITDA of $25 million and sales of $152 million. “The company has strengthened its overall business,” Behrman said. “Cash flows are up, and it’s a sign of us solidifying out business position.”

Looking ahead, Behrman expects the company to continue showing organic growth, which he anticipates to be supplemented with product line expansion opportunities and possible add-on acquisitions.


Buyer: Behrman Capital

Target: Woodcraft Industries

Debt Providers: Credit Suisse First Boston, Wachovia Securities, Antares Capital

Lawyers: BC: Goodwin Procter

Accountant: BC: Deloitte & Touche