River Associates Passes Packaging Co. to PNC –

Two financial buyers played pass-the-company as River Associates sold food packaging maker Cady Industries to PNC Equity Management Corp. early this month.

Although the price of Cady Industries was not disclosed, Paul Giusti, a principal at PNC, said his firm paid a multiple of about seven times free cash flow.

A source close to the deal said River Associates had realized a 40% return on the investment. The firm had owned the company for five years, during which time revenue at Cady doubled, the source said.

Cady, based in Pearson, Ga., has yearly revenue of approximately $45 million. The company manufactures woven fabric and flexible packaging for the agriculture industry, such as bags for rice and onions. According to Mr. Giusti, the firm will use Cady as a platform.

Financing for the deal was provided by a syndicated loan from Antares Leveraged Capital Corp. and National City Capital, Mr. Giusti said. About 45% of the transaction value came from a combination of equity and mezzanine debt provided by PNC, he added.

PNC has purchased companies from other buyout groups before. In one such deal, the firm bought Cerex Advanced Fabrics from Code, Hennessy & Simmons a year ago.

Harris Williams & Co. acted as adviser to Chattanooga, Tenn.-based River Associates. According to Chris Williams, an investment banker at Harris Williams, about one-fourth of his firm’s business comes in the form of financial-buyer-to-financial-buyer transactions.