- Doubles size of CLO operation
- Credit Suisse provides leverage
- Two arms function differently
The business development company Kohlberg Capital Corp. has nearly doubled the size of its collateralized loan obligation business by acquiring CLO manager Trimaran Advisors LLC and equity interests in Trimaran’s funds.
Trimaran Advisors, with $1.5 billion of assets under management, joins $2 billion-asset Katonah Debt Advisors as a CLO arm of New York-based Kohlberg Capital.
“This is an important transaction for KCAP which significantly expands our existing asset management business. With this transaction completed, Katonah Debt Advisors and Trimaran Advisors will have over $3.4 billion of combined assets under management,” said Dayl Pearson, the president and chief executive officer of Kohlberg Capital, in the press release announcing the deal. He referred to the company by its ticker symbol, adding, “Trimaran Advisors has an outstanding track record, and the combination is expected to result in significant synergies and will provide a platform to grow KCAP’s business.”
As part of the transaction, Kohlberg Capital said it arranged a $30 million credit facility with Credit Suisse that will allow the BDC to add “a moderate amount of leverage” to its balance sheet. Kohlberg Capital said it paid $25 million in cash and 3.6 million shares of Kohlberg Capital stock to complete the deal.
The two CLO managers pursue somewhat different strategies and appear to be treated differently within the Kohlberg Capital organization.
Trimaran Advisors, founded in 1998, is a credit-based alternative asset manager that manages four CLO funds, focusing primarily on below investment grade corporate debt. Jay Bloom and Dean Kehler, principals of Trimaran Advisors, will continue as employees of Trimaran Advisors and have joined Kohlberg Capital’s board, the company said in its press release. Dominick Mazzitelli, the portfolio manager of the Trimaran Advisors CLO funds, will continue there.
Katonah Debt Advisors is described on the Kohlberg Capital Web site as a wholly owned portfolio company. E. A. Kratzman, III, Katonah Debt Advisors’s president, serves as a vice president of Kohlberg Capital. Katonah Debt Advisors manages CLO funds investing in broadly syndicated senior loans, second lien loans, high-yield bonds, credit default swaps and other credit instruments.
The two CLO managers will work together, although the extent of that cooperation is not clear. Pearson said Mazzitelli will be assisted by Trimaran Advisors investment professionals expanding and enhancing the Katonah Debt Advisors team.
Kohlberg Capital focuses on mid-market investments. It originates, structures, finances and manages a portfolio of term loans, mezzanine investments and some equity securities in mid-market companies. The company defines mid-market companies as having $7.5 million to $50 million of EBITDA.
Kohlberg Capital did not respond to a request for comment.