Done Deals: Berkshire Tries Another Retail Co. –

Berkshire Partners kicked off the month of May with an investment in TVI, a group of secondhand merchandise retail stores. While Berkshire invested approximately $45 million in equity for a majority stake, management and the chief executive officer have retained an ownership interest.

Kevin Callaghan, a managing director at Boston-based Berkshire, declined to disclose a total transaction price for the deal, but said it ultimately is structured as a recapitalization. Fleet National Bank and Union Bank of California led the senior debt financing.

TVI, based in Bellevue, Wash., is the largest for-profit, secondhand merchandise retailer in the world. Its stores operate under the names Value Village in the Pacific Northwest region of the U.S. and Canada, Savers in the rest of the U.S. and Australia, and Village des Valeurs in Quebec.

TVI purchases resale merchandise from a network of local non-profit vendor organizations and sells it to the public through its 172 thrift stores.

The company generated sales of approximately $286.7 million in 1999. The acquisition of TVI is Berkshire’s 14th investment in retailing or retailing-related businesses.

When looking for retail-related investments, Callaghan said, Berkshire looks for three characteristics in particular; a definable niche, growth opportunity and a good management team. TVI possesses all three of these, he said.

Its niche is resale merchandise that appeals to a wide demographic of shoppers, it has the potential to double its number of stores in five years and Thomas Ellison, the CEO, is a member of the family that founded the first Salvation Army store in the 1920s, Callaghan said.

As for Berkshire’s most recent retail investments, the firm in 1999 invested in Waterworks, a specialty retailer of bath soaps. In 1998, the firm acquired Greyhound Leisure Services and Onboard Media to form Miami Cruiseline Holdings, an operator of duty-free stores on cruise ships and in airports.