Target: AmeriCast Technologies Inc.
Price: $288 million
Sponsor: Bradken Ltd.
Seller: Castle Harlan Inc.
Financial Adviser: Sponsor: Merrill Lynch
Legal Adviser: Sponsor: Mallesons Stephen Jaques; Seller: Schulte Roth & Zabel LLP
The New York-based buyout shop earned more than 3X its investment and a 90 percent internal rate of return after selling AmeriCast to Bradken Ltd., an Australian company that was an original minority investor alongside Castle Harlan. The deal was valued at $288 million. The firm bought AmeriCast in late 2006 from
AmeriCast marks Castle Harlan’s fifth impressive exit from Fund IV. Austar United Communications Limited, a cable television company in Australia, earned 7.2X its investment and a 134 percent IRR; Horizon Lines Holding Corp., an ocean carrier, earned 3.2X its investment and a 116 percent IRR; PolyPipe Group, a supplier of plastic pipes for sanitary systems, returned 4.5X its investment and a 160 percent IRR; and RathGibson Inc., a manufacturer of stainless steel tubing products, returned 2.6X Castle Harlan’s investment and a 105 percent IRR. Castle Harlan on its exit from AmeriCast established a $600,000 scholarship fund for employees and their families; it set up a similar $400,000 fund for PolyPipe.
Meantime, Castle Harlan is busy shoring up the performance of several Fund IV portfolio companies. Four of the remaining eight companies showed up on a June Standard & Poor’s list of companies facing credit stress, as previously reported in Buyouts.
They include Ames True Temper, a maker of wheelbarrows and other lawn and garden products that Castle Harlan bought in June 2004 for $380 million and that S&P has rated “CCC+” (with a stable outlook); Baker & Taylor Acquisitions Corp., a distributor of books, videos and music to public libraries that Castle Harlan bought in July 2006 for $455 million which is rated “B” (stable); Caribbean Restaurants LLC, a chain of Burger King restaurants in Puerto Ric that is rated “B-” with a negative outlook and facing potential bond downgrades; and Perkins & Marie Callender’s Inc., a restaurant chain operator that the firm bought in May 2006 in a deal valued at $440 million that is rated “B-” with a negative outlook, facing potential bond downgrades.
The other four companies in Fund IV are Advanced Accessory Systems, a company that makes car accessories such as bicycle racks and that Castle Harlan bought in April 2003 for $260 million; Anchor Drilling Fluids USA Inc., a company that provides drilling fluids and other services to the oil industry and that Castle Harlan bought in April for $250 million; Bravo Development Inc., an upscale Italian restaurant chain that the firm bought in July 2006 for an undisclosed amount; and United Malt Holdings, a producer of malts used in beverages that Castle Harlan bought in September 2006 for an undisclosed amount.
Various media reports have put the target on its fifth fund at between $1.5 billion to $2 billion. Howard Morgan, senior managing director, declined to discuss the fund.