- Building products company survives downturn
- Union contract up in 2013
- Sponsor under no pressure
Industrial Opportunity Partners and American Capital Ltd. have owned Algoma Hardwoods Inc., a manufacturer of architectural wood doors for commercial construction, since April 2006
Terms of that deal weren’t released, but American Capital, a publicly traded business development company, disclosed that it invested $29 million to help Industrial Opportunity buy the Algoma, Wisc.-based company from its family owners. American Capital’s investment took the form of a senior term loan, senior subordinated debt and convertible preferred equity, according to a firm announcement. Though Industrial Opportunity didn’t disclose its investment, the firm typically invests $5 million to $30 million in its deals.
Algoma Hardwoods’s products are primarily used in new construction and remodeling of office buildings, medical buildings, stadiums and high-rise condominiums. The company also has a manufacturing facility in Jefferson City, Tenn. Thomas Paisley, an operating principal with Industrial Opportunity, is the company’s CEO.
Should another sponsor want to buy the company, it appears it would have to negotiate a union contract in early 2013. The company employs approximately 250, many of whom are members of the United Brotherhood of Carpenters and Joiners Local 1521. The union had agreed to a three-year contract a month before Industrial Opportunity and American Capital took over in 2006 and, in March 2010, it agreed to another three-year contract, according to the Green Bay Press-Gazette.
It’s not clear how the company is performing, as executives from both firms did not return calls seeking comment. But the fact that a building products company with unionized labor is up and humming after the housing crisis suggests that at the very least it is stable, perhaps even poised for growth if and when housing rebounds. American Capital was carrying its mezzanine investment in the company, which has a 14.1 percent interest rate and matures in September 2013, at a cost of $16 million and a fair value of $16.3 million as of Dec. 31, 2011, according to the company’s most recent 10-K, filed in February. By comparison, it was carrying the same debt at a cost of $15.6 million and a fair value of $15.3 million at the end of 2010.
Evanston, Ill.-based industrial Opportunity does not appear to be under special pressure to exit older investments. The firm has had no problem raising its second fund, which is expected to close at its $275 million hard cap in the coming weeks (see story in fundraising section).