Brockway Moran & Partners Inc. is diving into the swimming pool space. The Boca Raton, Fla.-based private equity firm has just penned a deal to recapitalize swimming pool component manufacturer Latham International for $163 million. This deal comes just three weeks after the firm sold BMP/CEI, its cosmetics holding company, for a 5.5x return.
While Brockway Moran is leading the deal, Latham management took a minority stake in the company. Summer Street Capital and Toronto-based investment firm HSBC Capital are the sellers. Harris Williams & Co. ran the auction process.
Latham, which expects to see 2004 sales in the $170 million range, manufactures swimming pool parts and accessories. Since its inception, the company has acquired a group of brand names including Pacific Pools, Kafko, Performance Pool, Technican, Trillium and Triac. Latham employs approximately 1,000 workers at 20 locations throughout North America.
“With Latham, you have a strong company in a good niche market, and a strong management team. This deal
really exemplifies the ABCs of buyout investing,” said Michael Moran, a managing partner at Brockway Moran.
And though the capital structure of the deal is still under negotiation, Moran said that it, too, will be a textbook exercise in leveraged investing; more or less taking on the traditional 30%/70% equity-to-debt split. He added that the firm was still in the beauty contest phase of finding the lender or lenders to supply the tranche of senior and mezzanine bank debt.
For the equity portion of the transaction, Brockway Moran will tap its vintage 2001 Brockway Moran & Partners Fund II LP. Including this deal, Fund II, which held a final close with $410 million in commitments, is approximately one-third invested.
As an agreed upon part of the recap, Latham will acquire the manufacturing operations of Fort Wayne Pools Inc. and Les Industries R.P. Inc. from an affiliate of SCP Pool Corp. Fort Wayne Pools, based in Fort Wayne, Ind., is a manufacturer of in-ground swimming pools and parts, including braces, wall panels, vinyl liners, coping and steps. Similarly, Les Industries manufactures swimming pool components and accessories, primarily focused on steel wall panels and braces and is based out of Quebec.
To help finance the two add-ons, Latham will divest Pool Technology Distributors Inc., its Canadian wholesale distribution to Pool Corp.
For Brockway Moran, the Latham investment follows a frenzied string of transactions over the past five months. Earlier in November, the firm agreed to sell its cosmetics platform BMP/CEI Holdings Inc. to Onex Partners LP in a transaction valued at $245 million.
Last month, in a transaction advised by Wachovia Securities LLC and CIBC World Markets Corp., Brockway Moran signed an agreement to sell Integrated Aerospace Inc. to Smiths Aerospace LLC for $110 million. In July, the firm completed the $158 million sale of Gold’s Gym International Inc. to a group led by TRT Holdings Inc. Also in July, Brockway Moran, along with Meridian Venture Partners, completed the recapitalization of Air Evac Lifeteam for an undisclosed amount.