Caltius Closes Deal On Northwest Coatings Corp. –

Caltius Private Equity recently announced the acquisition of Northwest Coatings Corporation, an Oak Creek, Wis.-based manufacturer of customized coatings and adhesives.

Specific terms of the deal remain undisclosed, but Garrick Ahn, a managing director at Caltius Private Equity, acknowledged the total purchase was under $50 million (with EBITDA under $10 million) leaving no question that the transaction qualifies as a small-market deal.

Caltius Private Equity is listed as the controlling interest, holding “well over 50%” of Northwest shares, according to Ahn. Antares Capital Corporation and American Capital Strategies contributed a $12 million senior credit facility and $10 million in subordinated debt, respectively (see Buyouts, 11/18/02).

According to Ahn, there was no bidding process for Northwest Coatings. “HVL Holdings, run by Jeffrey Holdsberg and Robert Van Liedekerke, were actively searching for an acquisition in the graphic arts sector, and when they found Northwest, they brought us in,” Ahn said.

Ahn indicated Caltius has decided to stick with Northwest Coatings’ current management team, with some modification. “HVL Holdings will support Northwest in all additional acquisition and growth initiatives.” And although Caltius has no definitive exit strategy at this time, the firm does plan to “grow the company to a size other players [buyouts shops] may find interesting,” said James Upchurch, president and CEO of Caltius Capital Management.

What initially interested Upchurch, Ahn and the rest of the Caltius team was the emerging technology in the graphic arts sector.

“The customized coatings and adhesives industry is in the midst of a major shift,” said Upchurch. “In the past, adhesives were either solvent- or water-based. Solvents are a danger to the environment, and water-based mixtures take an inordinate amount of time to dry. Northwest utilizes an ultraviolet electron beam technology that instantly cures the application, which leads to a rise in productivity and a drop in inventory and waste.” Northwest is Caltius’ first investment in the graphic arts sector.

With an office in San Francisco and headquarters in Los Angeles, Caltius Private Equity and Caltius Mezzanine comprise Caltius Capital Management, an investment firm founded in 1997 with over $155 million in equity deployed over 24 transactions through its PE and Mezzanine units.

Caltius Mezzanine manages three funds totaling $215 million, providing subordinated debt in amounts of $5 million to $25 million to mid-sized companies used in buyouts, acquisitions, and recapitalizations. Caltius’ private equity arm has performed six deals since 1999, utilizing Caltius Private Equity Partners I, a $53 million fund.

Northwest Coatings is the equity group’s third acquisition, following the January 2000 buyout of Consolidated Fire Protection LLC, a holding company in the fire safety sector, and the March 2000 leveraged recapitalization of La Dove Inc., a private label personal care company. On the latter transaction, Caltius partnered with Arena Capital, a New York-based private equity firm.