ICV Capital Chows On Chung’s –

ICV Capital Partners, utilizing its inaugural fund, has acquired Chung’s Foods Inc. ICV Managing Director Tarrus Richardson declined to offer specifics, but Richardson did say, “The deal [price] is north of $20 million with a multiple in the sixes.”

According to Richardson, Banc of America provided $10 million in senior debt and ICV sponsored the balance of subordinated debt and equity.

Overall, this is ICV’s second purchase and its first acquisition since the $35 million LBO of Sterling Foods Inc. (see Buyouts 10/22/01.) ICV Partners LP, the firm’s $130.5 million fund, is now approximately 50% invested.

“We over-equitize deals at closing to provide the management the flexibility to pursue acquisitions and make improvements,” said Richardson. He said Chung’s would not be attractive to strategic buyers “until [the purchase price] reaches the $75 million to $100 million range.”

“Our goal is to create a company that dominates the Asian and fresh deli food sectors…if we do that we should be able to recap or become attractive to strategic buyers,” Richardson added. He also said ICV plans to keep Chung’s management team intact.

Chung’s was sold by Yellowstone Capital Inc., but a group including Yellowstone and Chung’s management will retain a 25% equity interest in the company.

“We believe [Chung’s] can serve as a stand-alone investment, and may be able to support add-ons in the future,” said Richardson. “We are hoping to tie in additional ethnic or deli food companies.”

Once Chung’s decided to sell, Houlihan Lokey Howard & Zukin Partner Jay Novak, retained by Yellowstone to locate a buyer, contacted Richardson and ICV. Houlihan then ran the auction, subsequently won by ICV. “Chung’s questions focused on our commitment to growth,” Richardson explained. “The seller was looking for a buyer that would allow him the opportunity to roll over equity.”

According to Richardson, ethnic foods – both frozen and deli-style – are one of the fastest growing sectors in the food sector. Chung’s has seen solid growth, from $3 million in revenue in 1994 to $25 million in 2002.

Two More Deals For Hungry ICV

Unrelated to the Chung’s acquisition, ICV closed two additional deals in January, in the retail and auto accessories sectors.

ICV’s first foray into the retail sector was Marshall Management Company, a Las Vegas-based specialty retailer. Currently, the retail chain has 40 stores that cater to visitors to the resorts and casinos located in the city, including Bally’s, Caesars Palace, the Venetian, Harrah’s and MGM Grand. Plans include opening six additional stores in Atlantic City.

ICV’s third acquisition in January and first purchase in the auto sector was AAMP of America, from Recotron Corp. According to Willie Woods, managing director at ICV, the total purchase price was approximately $30 million, with $16.5 million in equity and approximately $14 million in debt, provided by GE Capital.

AAMP is a manufacturer and retailer of car audio and security accessories. Based in Clearwater, Fla., the retailer has manufacturing and warehouse facilities in Springfield, Mo., Reno and San Diego.