First Atlantic Acquires Refinery Repair Shop

Target: Spring Industrial Holdings

Price: $200 million

Sponsor: First Atlantic Capital

Seller: The CapStreet Group

Financial Adviser: Seller: Edgeview Partners

Legal Advisers: Sponsor: Kirkland & Ellis; Seller: Vinson & Elkins

It’s been more than three decades since an oil refinery was built in the United States. While politicians fret about the implications for gas prices amid rising consumer demand, buyout shop First Atlantic Capital is looking to take advantage of the situation with its $200 million purchase of Sprint Industrial Holdings, which derives a good portion of its revenue from maintaining the nation’s fleet of aging refineries.

First Atlantic was joined on the deal by a handful of co-investors, including Goldman Sachs Group, Oaktree Capital Management and buyout firm Cordova, Smart & Williams. Goldman Sachs and Oaktree Capital are providing mezzanine financing, underscoring the growing role such firms are playing in buyouts as the credit crunch reshuffles the lending landscape. Goldman Sachs and Oaktree Capital will each have a seat on Sprint Industrials’s board.

The seller was The CapTree Group, a Houston LBO firm that will retain a small, undisclosed equity holding. The deal closed at the end of last month.

Based in Houston, Sprint Industrial provides storage tanks capable of temporarily holding large volumes of liquid while refineries are being worked on. The company also performs safety inspections and repairs of refineries. Both services are being outsourced more often by big oil companies, giving Spring Industrial a natural path to organic growth, said Roberto Buaron, chairman and CEO of New York-based First Atlantic Capital.

What’s more, new environmental standards for gasoline require that chemicals be refined at higher temperatures. The added heat contributes to greater wear on aging facilities. “All the trends are point toward substantially more growth,” Buaron said. “This is a good platform for us.”

Edgeview Partners, the mid-market sell-side adviser that was recently acquired by CIT Group Inc., ran the auction for Sprint Industrial. CIT also arranged the senior credit package, although Edgeview treated the financing group as a third party, according to people with knowledge of the transaction.—J.H.