Monomoy

Buyer: Monomoy Capital Partners

Target: Republic Storage Systems Co. Inc.

Price: $20 million

Legal Counsel: Buyer: Kirkland & Ellis; Seller: Calfee Halter & Griswold

Financial Advisors: Buyer: Ameridan Resources; Seller: Duff & Phelps Securities Workout Consultant; Newmarket Partners DIP Financing; GE Corporate Lending

Monomoy Principal Stephen Presser said the industry is consolidating and to some extent shielded from overseas competition. The company installs its lockers as well as building them, and overseas competitors can’t provide installation services, said Presser. Also, Republic sells about 60% of is final product to school construction and the vast majority of those projects, either by municipal tradition or policy, require U.S. made facilities, said Presser.

The company is in bankruptcy for a few reasons, said Presser: a hurricane in 2003 that caused flooding and severe damage and the doubling of costs of steel coil in 2004.

Presser said Monomoy plans to improve the company’s business in two phases. First, it has renegotiated the labor agreement with the steel worker’s union, which will allow the company to shed about $30 million of legacy retiree, health and pension obligations. Second, that new labor agreement will allow Monomoy to replace the company’s current manufacturing system.

“I think this company still runs a 1950s manufacturing process. With the new labor agreement, we may not ever put it in the 21st century, but we might get them into the 1990s,” said Presser, who worked on a number of metals industry transactions while at KPS.

Monomoy’s agreement with Republic is part of a pre-negotiated bankruptcy, during which there could be other bids. But Presser said direct competitors aren’t likely to have the capital necessary to buy and another financial sponsor would have its work cut out for it—having to negotiate a deal with the steelworkers union, which Monomoy has already done.