New Water Capital-backed outdoor recreation company closes facilities in capital crunch

Hemisphere Design Works, backed by New Water Capital, closed two Michigan facilities and is laying off 68 employees, according to documents filed with the state.

The documents, called a WARN Act notification, said the company tried but failed to raise additional capital, including from its term lender. The company has benefited from state aid as part of its expansion in Muskegon, a city of 38,000 in Michigan. It’s unclear how these closures could affect state funds that have flowed into company coffers.

The capital, “if obtained, would have enabled it to avoid or postpone a closure and continue operations,” the document said. “As a result of this unforeseen business circumstance, the company will now be forced to permanently close the facilities.”

New Water formed Hemisphere by combining KL Outdoor, which it acquired in 2016, and GSC Technologies, which it bought in 2017. The firm merged the two companies last year and renamed them Hemisphere Design Works.

The company makes kayaks, stand-up paddle boards, canoes, paddle boats, hunting blinds, sleds, outdoor furniture and portable restrooms under brands like Sun Dolphin, Future Beach, Evoke, Extent, Equinox and Viper, according to a press release.

It’s not clear why the company has run into financial distress. A report in the Muskegon Times said one of the company’s largest customers, Dick’s Sporting Goods, ended a contract for kayaks with Hemisphere. No one from Dick’s returned a comment request Monday.

The company received a state performance-based development grant of $765,000 as part of its expansion in Muskogen, a press release from 2017 said. The city also granted the company a 12-year tax abatement valued at $69,000 to support the project, the press release said. It’s unclear how that state aid will be affected by the plant closures. Krista Johnson, manager with Michigan’s Workforce Development Agency, did not return a request for comment Monday.

New Water was launched in 2014 by Jason Neimark, Mark Becker, John Disa and Brian McGee. It focuses investments on middle-market companies with about $30 million to $300 million in consumer products, retail and industrial manufacturing and services. It targets special situations investments like turnarounds, underperformers, corporate carveouts and companies in transition, according to the firm’s Form ADV.

Neimark was formerly a managing director at Sun Capital; Becker worked as a partner at Hammond, Kennedy, Whitney & Co.; McGee was formerly a principal at Sun Capital; and Disa previously worked as president of global retail at Ashley Furniture, and CEO of Wickes Furniture.

Becker moved on in 2017. It’s not clear what he’s doing now. Becker did not respond to a LinkedIn connection request.

New Water raised its debut fund in 2015, closing on $406 million, ahead of its $250 million target. Marketing on New Water Capital Partners I took under six months, Buyouts previously reported.

Fund I was generating a 0.90x total value to paid-in multiple as of June 30, 2018, according to performance information from Los Angeles City Employees’ Retirement System.

Action Item: Check out New Water’s Form ADV here: https://bit.ly/2WJuCZr