Newsroom
"Georgia rubber recycler seeks investor or buyer"
Waste & Recycling News
Rubber Wholesalers Inc., a processor and manufacturer of consumer and industrial goods from recycled rubber, has filed for Chapter 11 bankruptcy protection and is seeking an investor or buyer. Ranger-based Rubber Wholesalers has retained Equity Partners CRB L.L.C. to conduct the search for an investor or buyer. The case is being heard in the U.S. Bankruptcy Court for the Northern District of Georgia.
Click Here to Read More
"Firm hopes to re-open L. Forest "
The Scott County Times
FOREST - Since the closure of Lady Forest, Inc., and Forest Packing, a large number of former employees have sought other means of work but one firm is hoping to change all of that by re-opening the company under new management. “We’d all like to see this operation back in business,” said Stephen Smith of Smith & Company P.A. of Jackson. Smith is the Chapter 7 trustee charged with maximizing the value of the assets. “I believe that at one time they employed 600 people,” Smith said in a statement released Tuesday. Smith said he has put a motion before the court to retain a firm with a track record of getting shuttered companies back into business, Equity Partners.
Click Here to Read More
CGF Sells Biodiesel Refinery
Biofuels International
It has been out of service since 2009 and now US, Maryland-based biodiesel firm Chesapeake Green Fuels (CGF) has retained Equity Partners to find a buyer for its biodiesel production plant in Clayton.
Click Here to Read More
Clayton Biodiesel Plant Up for Sale
The News Journal
A shuttered biodiesel refinery in Clayton is for sale again, and its owners say the right buyer can make it profitable, in part because recent tax-law changes restored an expired credit. The current owners, Chesapeake Green Fuels LLC, retained Equity Partners Inc. of Maryland, an investment banker, to seek a buyer for the refinery.
Click Here to Read More
Dealmakers Turning Apprehensive About a Second Downturn
The Daily Record
Mergers and acquisition action finally started to show the promise that many expected to appear earlier in the year during the second quarter, but looking forward, economists say deal volume could fall flat. What appeared to be a flicker of hope that the economy had started to bounce back this spring has turned to apprehension about a second economic downturn.
Deal activity has been riding up and down, seesaw-like, for the last several quarters, making it difficult to read.
In the first quarter, deal activity increased, but values attached to the deals were slightly ho-hum, with the largest ringing in at $200 million. Values jumped in the second quarter - one company with ties to Maryland sold for $1.4 billion - but the number of deals announced dipped.
That picture is pretty consistent with what's been happening in the economy, said Anirban Basu, CEO of Sage Policy Group Inc., a Baltimore-based economic and policy consulting firm. "There are many distressed and bargain assets presently for sale in the economy both locally and nationally, and there is a good bit of cash looking for high rates of return," he said. "When there are assets for sale and people ready to purchase or to merge, you have the recipe for elevated levels of deal flow, and that appears to be precisely what occurred during this last quarter. More interesting is to try to look ahead and to try to figure out what will happen given growing fears of another economic downturn," Basu said.
Each quarter, Bloomberg Financial exclusively provides The Daily Record with mergers and acquisitions data to study trends in pending and completed deals in which Maryland companies were the buyers, sellers or targets. The second quarter resulted in 54 transactions, down from 64 deals in the first quarter. Still, deal count was up over the dismal record in the second quarter of 2009, when there were 31 transactions. In 2009, only the fourth quarter was better, with 57 deals completed.
Although Bloomberg also provides deal value, deal count is a more important measure of the market because some companies do not disclose how much they paid to scoop up a competitor. Of the 54 deals in the quarter, 28 made price tags public for a total value of $3.13 billion, up from $778 million in the first quarter, when 16 of 64 transactions included deal values. Total deal value also improved over the second quarter of 2009, which had announced deal values of $1.83 billion.
2 ways to read numbers
"There are two ways to read these numbers: One is a good sign that things are turning around, or it could realistically be that things take a while to do and they started making these deals a while ago," said Richard Clinch, director of economic development at the University of Baltimore's Jacob France Institute. "Given the difficulty in raising capital, I wouldn't be surprised if [activity] went down next quarter," he said. "I think it would be entirely consistent with the way things are going."
Regardless of what's to come, deals did get done in the second quarter.
The major deal of the quarter involved private equity. TPG Capital paid $1.4 billion to acquire Bothell, Wash.-based Vertafore Inc., a provider of software and services to the insurance industry, from JMI Equity, based in Baltimore, and Hellman & Friedman. Like the first quarter, when lots of real estate changed hands, the second quarter had 11 deals involving real estate. Real estate investment trusts - corporations that invest in real estate with special tax considerations and in exchange offer investors high yields — were involved in several deals. Bethesda's Pebblebrook Hotel Trust bought three hotels for $206 million, including San Francisco's Sir Francis Drake Hotel. Corporate Office Properties Trust in Columbia bought the Rappahannock Building in Tyson's Corner, Va., the headquarters of defense contractor Mitre Corp., for $40 million. The life sciences nonprofit J. Craig Venter Institute sold its five-building campus in Rockville for $53 million to the BioMed Realty Trust, based in San Diego, in May. The institute will lease back its space for 10 years.
Merger activity tends to pick up at the end of a recession, but Clinch said that since the Greek economy imploded after decades of overspending and “cooking the books” in that country, the recession in the United States has been extended, potentially slowing merger and acquisition activity.
A switch
In a switch from previous quarters when international firms were buying up businesses owned by Maryland firms or located in the state, only one of the deals in the second quarter involved a foreign buyer, and that company was Canadian. “We kind of hoped the Europeans were managing their house a little better than we were, but they weren’t,” Clinch said. “Clearly, I think the recovery has been set back at least a quarter, if not more.” But according to Basu, the issue is less the exotic Greek islands and more about local problems. “This is a reflection of what’s going on in America,” he said. “This is a function of the weak housing market. This is a function of lackluster job growth, including not enough jobs being added in the private sector. “This is a function of still tight credit, and this is a function of gridlock on Capitol Hill,” Basu said. “Put it all together and there is reason to be skeptical about U.S. economic prospects, and therefore there will be a higher propensity to hold onto cash, and that may stifle merger and acquisition deal flow.”
More fear on sell side
Ken Mann, a partner with Equity Partners Inc., an Easton firm that specializes in mergers and acquisitions for distressed businesses, said he has seen more fear on the sell side, rather than the buy side. But, he cautioned, distressed sales are different than traditional mergers and acquisitions, where a buyer might have more time to make a decision. With distressed sales, buyers don’t have the luxury of waiting to buy a company in a year or so, because that business won’t be there to buy. “Sellers and lenders are reluctant to even put things on the market because they fear that given the state of the economy and lack of liquidity that there won’t be buyers and that prices will be low,” Mann said.
Interestingly, Mann said that fear has been proved wrong when distressed businesses make it to the market. “In the transactions we have done, we’ve had competitive bidders, we’ve had multiple offers,” he said. “We’re getting good activity on the things that we do list. I think there’s a delta between the reality and the perception on the sale side, and that hesitation has been making it slow on the sell side,” Mann said. “We’re finding there are still people who are looking and have been able to close. I don’t know how we convince potential sellers or lenders that that’s the case.”
Somewhat cautious
Buyers are being somewhat cautious, waiting to see how some things work out, but their fear has not been “paralyzing,” Mann said. Those who have cash or are able to get financing see now as a good time to buy distressed companies. “With that said, they’re not stealing anything,” he said. “There’s enough competition to make for good prices. We may not be getting the same multiples we were seeing a year ago, but I think we’re getting fair deals.”
Looking ahead, Basu said that if worries about the economic situation in the United States continue to grow, look for buyers to sit tight. “These fears of another recession are rooted in valid concerns and one would think that these growing concerns about near-team economic prospects may serve to diminish deal-making in the quarter ahead,” Basu said. “In other words, as people become more skeptical about economic performance going forward, there will be desire to retain cash, and retaining cash and deal-making are not compatible.”
Who Has the Reins? Maximizing Value of a Service Business in Chapter 11
American Bankruptcy Institute
Experienced professionals know that parties will have varying amounts of leverage as the dynamics of a chapter 11 case unfold, and these professionals carefully take their understanding of this leverage into account when they plan their activities and advise their clients.
Click Here to Read More
Credit Bid Conundrum: Why Secured Creditors Should Welcome (and Pay) Professionals, Even When They Credit Bid
American Bankruptcy Institute
Historically, a credit bid in a chapter 11 asset sale pursuant to 11 U.S.C. §363 has frequently been viewed as a "nonsale" event, and the creditors of the debtor-in-possession (DIP) did not feel an obligation to pay an investment banker, business broker, real estate broker or auctioneer (the professional) a commission and/or fee for that result.
Click Here to Read More
Case Study for Sell-side Techniques to Use in an Asset Sale with Multiple Bidders
American Bankruptcy Institute
This case study discusses Wellington Leisure Products Inc. (WLP) (seller), a consumer products manufacturer with diverse product lines: cordage (rope), both commercial and retail; PDFs - life vests; pool toys; patio furniture (wood furniture, umbrellas, and replacement cushions); and hunting products (deer hunting scents/lures).
Click Here to Read More
