Odyssey Makes A Safety Play –

Odyssey Investment Partners has long since been a player in the industrials sectors. But until now, the firm’s investments in the space have been centered on machinery rather than the workers that operate them. Recent examples include the firm’s April 2005 acquisition of construction equipment rental company Neff Corp., and its December 2004 buyout of Pro Mach Inc. a packaging machinery manufacturer.

The firm’s most recent investment, however, shows that Odyssey does take into account the man behind the machine. In a sponsor to sponsor transaction slated to close in the third quarter, the New York-based private equity firm agreed to acquire Norcross Safety Products LLC from an investor group comprised of Trimaran Capital Partners, John Hancock Life Insurance Co. and CIVC Partners.

Including the assumption of Norcross’ outstanding debt, the transaction is valued at $495 million, or about 7.7x the company’s 2004 adjusted EBITDA of $64.4 million.

Norcross manufactures and markets protective equipment for workers that operate in the industrial, fire services, utility and high voltage markets. Individual products manufactured and sold by the Oak Brook, Ill.-based company include gas masks and filters, protective footwear, first aid kits, head-to-toe flame retardant gear, electrical safety equipment and homeland security products.

“We like investing in spaces where government regulation is a friend to the industry, and this is clearly a case of that-not only in the U.S. but worldwide,” said Odyssey Managing Director Brian Kwait. He further noted that entities such as the Occupational Safety & Health Administration (OSHA) keep tabs on the safety conditions of both U.S.-based companies as well as of foreign companies that provide goods and services to U.S. businesses.

In 2004, Norcross generated revenues of $440.3 million, a $67.8 million increase from the year prior and a $116.8 million premium over its 2002 revenues. Last year, 70.5% of the company’s net sales came from general industrial products while 17.9% came from fire services gear and the remaining 11.6% hailed from the utilities and high voltage sectors.

But despite growth in revenues and EBITDA over the past three years, finding a buyer for Norcross was not a speedy process. The company was originally put up for sale about a year-and-a-half ago and, after receiving minimal interest from potential buyers, was pulled from the market about six months later, Kwait said. Potential buyers at that time were reported to include Thomas H. Lee Partners, Code Hennessy & Simmons LLC, Investcorp, Leonard Green & Partners and Cypress Group. Kwait declined to discuss why the company was not able to sell.

One possibility could have been company’s fairly heavy debt load. As of Dec. 31, 2004, Norcross’ long-term debt obligations totaled more than $253 million, the result of an acquisition spree the company went on after it was acquired by its current owners.

Principals at Odyssey were introduced to Norcross’ management last December by CSFB, and were awarded the company late last month through a process Kwait said was a “selective auction process.”

To grow Norcross, Odyssey will follow the lead of the selling party and focus on growing the company’s multi-prong strategy through strategic product expansion and geographic expansion in and around the company’s locals in Canada, Europe and Africa.