Carousel Taps Unitranche Fund For Medical Company

The small market’s newest one-stop-shop debt provider has found its first borrower. Unitranche Fund LLC, co-managed by affiliates of Allied Capital and GE Commercial Finance, has agreed to back Carousel Capital’s latest buyout.

The Charlotte, N.C.-based LBO shop will spend an undisclosed sum to buy dental and medical supplier Brasseler USA, which generated revenue north of $100 million last year. The unitranche fund is kicking in $65 million in debt. GE Commercial Finance is also providing a $10 million revolver.

Though the price was officially undisclosed, a source familiar with the situation said Brasseler USA cost less than $150 million. That falls on the lower end of the unitranche fund’s sweet spot, which has the capacity to commit to facilities as large as $500 million. Carousel Capital targets companies generating EBITDA between $3 million to $15 million.

Sell-side adviser Houlihan Lokey Howard & Zukin approached Carousel Capital after Brasseler USA’s passive family owner hired the investment bank to advise on a liquidation of its stake in the company. Carousel Capital liked the company’s double-digit EBITDA growth and streamlined direct-marketing model, as well as the recession resistance of the medical supply industry. The firm convinced Brasseler USA’s management to sell off more than just the family’s shares, said Bill Hobbes, a partner at Carousel Capital. Management will keep a significant stake in the company.

Unlike some of its peers in the middle market, Carousel Capital has encountered little difficulty lining up debt financing on its small-market deals, Hobbes said .

Carousel Capital expects to bolster Brasseler USA’s top line with new hires in its direct sales force, with new product introductions, and through possible add-on acquisitions. Brasseler USA marks Carousel Capital’s fourth acquisition from its third fund, which closed in September with $210 million in commitments, short of the firm’s $300 million target.

GE Commercial Finance and business development company Allied Capital unveiled the $3.6 billion unitranche fund in December. The fund blends senior and subordinated debt and charges a single interest rate that is higher than a typical senior loan but lower than mezzanine debt. Behind the curtain, the firms split up the debt tranches, with GE Commercial Finance responsible for the senior portion and Allied Capital holding the subordinated debt.—E.G.