TH Lee Hunts For Exits –

Thomas H. Lee Partners has gone into full exit mode, with plans for three IPOs in the coming months. Two companies in the firm’s portfolio, Eye Care Centers of America and Fairpoint Communications, will use the income deposit securities structure in the offerings. The Simmons Co., meanwhile, has yet to file with the Securities and Exchange Commission, but has confirmed that it will file in June to pursue a public offering. TH Lee acquired Simmons just five months ago from Fenway Partners in a deal valued at $1.1 billion.

Published reports have indicated that TH Lee has already tapped Goldman Sachs and Citigroup as the lead underwriters for the Simmons offering, and there has been speculation that UBS and Deutsche Bank AG will take part in the IPO as well.

In the original deal for Simmons, TH Lee put in roughly $305 million of equity and company management contributed another $39 million. Fenway, meanwhile, held onto a 10% stake.

The statement issued by Simmons indicated the company will use the proceeds from the IPO to fund working capital and pay debt, and added that a portion of the shares could be sold by stockholders.

Exploring New Outlets

In the firm’s other proposed offerings, TH Lee intends to capitalize on the emergence of the IDS market. Earlier this month, Eye Care Centers of America filed with the SEC for a public offering that could be worth up to $375 million.

TH Lee did not say how many income units would be floated in the IPO and no estimation has yet to be made with regards to a price range for the securities. Banc of America Securities and Merrill Lynch are the lead underwriters of the offering and Citigroup and Lehman Brothers have been hired to assist.

Eye Care Centers, the No. 3 optical retail chain in the U.S., runs the Vision World, Hour Eyes, Stein Optical and Eyemasters retail outlets and took in $369.9 million in revenue for fiscal 2003. The company, based in San

Antonio, Calif., operates a total of 374 stores. During the TH Lee investment, the company has grown through acquisition, adding select retail chains of Vision Twenty-One in a 1999 deal, valued $37.3 million.

Thomas H. Lee acquired the business in a $300 million recapitalization in 1998, which gave the firm a roughly 90% stake. The Boston-based shop initially committed about $110 million out of its $3.6 billion Thomas H. Lee Equity Partners IV LP fund.

Meanwhile, in the Fairpoint Communications offering, which represents another IDS filing for TH Lee, the company has filed to raise $750 million through the IPO. Fairpoint is among four rural telcos, RLECs, to have filed an IDS offering so far, joining Valor Communications, Iowa Telecom and Alaska Communications. Valor is backed by Welsh Carson Anderson & Stowe, Vestar Capital Partners and Citicorp Venture Capital, while Alaska Communications, which is already publicly traded on the Nasdaq, is in the Fox Paine & Co. portfolio.

Fairpoint had originally filed for an IPO in May 2000, but ultimately pulled the offering later that year citing adverse market conditions.

Thomas H. Lee and Kelso & Co. originally acquired Fairpoint through a $445 million investment in MJD Communications. According to reports, TH Lee committed $375 million into the investment while, Kelso invested $70 million. Kelso was already an existing investor in MJD.

Fairpoint submitted the filing in March, indicating that CIBC World Markets, Citigroup and Deutsche Bank Securities would lead the underwriting.