H.I.G. Capital in late May announced it acquired the assets of Toronto-based Ontario Store Fixtures Inc. (OSF) from the court appointed receiver of the predecessor company, which had filed for bankruptcy in Canada in April. H.I.G. actually completed the deal April 17, which meant that OSF only spent a single day in receivership, said Doug Berman, a managing director at H.I.G.
Berman declined to disclose how much H.I.G. paid for OSF, which designs and manufactures custom display and storage fixtures, as well as custom body forms and metal shelving for retail stores in North America. The company also builds custom fixtures for the financial service industries, hotels and other commercial users of architectural millwork. He also declined to provide a typical deal size for H.I.G., saying the firm invests in a wide range of deals with varying sizes.
H.I.G. decided to acquire OSF because the company has tremendous franchise value, Berman said. In addition to its 75-year history and number one market share, the firm also has an attractive blue-chip customer base including Limited Brands Inc., Tommy Hilfiger Corp., Gap Inc. and The Walt Disney Co., he added. The company also has the unmatched ability in the store fixtures industry to deliver high quality, high capacity goods quickly, he said.
OSF ran into trouble in 2001 because the company was over-leveraged and did not have the free cash it needed to fund its business, Berman said. This happened because customer spending retracted during 2001 as result of a rocky retail market, he added. OSF also made management decisions that exacerbated the problem, Berman said.
As part of H.I.G.’s plan for turning around the company, H.I.G. is replacing OSF’s current chief executive officer and chief financial officer with a turnaround management team including CEO, CFO, general counsel, human resources director and information technology director, Berman said. Over time, H.I.G. will replaced the temporary managers with a full-time management team, Berman said.
H.I.G. and the new management team will also work to repair any damage done to OSF’s customer relationships. The company will focus on reaching out to its customers and assure them OSF is now on stable ground and will be able to deliver the products customers need, he said.
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