Sentinel Ties Up Yarn Deal –

While knitting has generally been associated as a pastime for grandmothers, the hobby has taken on kitsch appeal in recent years. Famous knitters include Julia Roberts, Cameron Diaz, Sarah Jessica Parker, even Russell Crowe has been rumored to be a knitting enthusiast. Among the private equity knitters, you can now count Sentinel Capital Partners as part of the crowd, as the firm recently acquired Ontario-based yarn-maker Spinrite through a recapitalization with management.

“It’s cool to knit now,” Sentinel Partner Eric Bommer said. “The average knitter is still a woman in her mid-50s to 60s, but there’s also been a resurgence in knitting and crocheting with younger people, and there are probably more younger knitters in the market than ever before.”

Sentinel Founder and Managing Partner David Lobel, added, “We think we’re buying a business in an industry that’s not only healthy, but where the tide is rising.” And he noted that while the hobby is growing, the North American knitting space is still just a niche industry at under $300 million, and Spinrite is considered one of the leaders in that niche.

Terms of the deal were undisclosed, although Bommer said the recap valued the business in the firm’s standard enterprise-value range of between $50 million and $75 million. Scotia Bank provided senior debt for the transaction, while Norwest contributed with a mezzanine package.

Spinrite is a manufacturer and marketer of craft yarn products in North America. The business was founded 52 years ago, and is best known for its Bernat, Patons, Lily Sugar n Cream and Phentex Brands. The company sells its products through specialty stores and mass merchants, including Wal-Mart, Michael’s Stores and JoAnn Stores.

Other private equity firms that have invested in the knitting space include The Riverside Co., with its acquisitions of and Keepsake Quilting, and NatWest Equity Partners, which completed a successful exit of Comer International, an Irish yarn maker, in 1999.

Lobel indicated that it was Sentinel’s attention to relationship-building that helped the firm win this deal. “[Spinrite] has been a family owned business from 1952 to the present,” he said. “There were a lot of personal relationships between the family and the town, and we were able to develop a rapport with the family that allowed them to conclude that we would be able to meet their non-financial objectives.”

Sentinel closed its most recent fund, Fund II, in June 1999 at $126 million. The firm is active in the U.S. and Canada and currently has $200 million of capital under management.