Company Overview
Advanced Tissue Sciences, Inc. ("ATS") was a leader in the field of tissue engineering, using patented technology to develop human-based tissue products for a variety of therapeutic applications prior to filing Chapter 11 Bankruptcy Protection.
Assignment Overview
ATS' Board of Directors engaged Eureka to evaluate strategic and financial alternatives for ATS and each of its tissue-engineering based product lines and development programs.
Challenges
ATS had seven primary product lines, each with unique challenges, capital requirements, development timelines, and strategic partnerships. Two products generated positive cash flow, two products generated losses, and the remaining three products required considerable investments and development timelines to realize their potential.
Solution
- Identified a strategy of divesting certain products to raise cash for remaining
products to create a new ATS. Divested non-core assets to strategic buyers.
- Repaid creditors in full with interest.
- Completed an initial shareholder distribution of 2x stock price at the time of
bankruptcy filing.
- Created a liquidating trust to complete subsequent shareholder
distributions from milestone and royalty payments from strategic partners.
Company Overview
Beverly Enterprises, Inc (NYSE: BEV) was a leading operator of skilled-nursing homes and a provider of ancillary services including hospice and rehab with approximately $2 billion in sales.
Assignment Overview
Initiated and advised activist shareholder group on public equity investment in and potential acquisition of Beverly Enterprises, Inc.
Eureka's Contribution and Outcome
- Identified value creation opportunity through separation of real estate
and operations
- Formed credible investor group including Appaloosa, Franklin and Formation
- Performed extensive valuation on the real estate and ancillaries
- Advised investor group on acquiring meaningful equity stake in the
Company to launch an activist role
- Approached Board of Directors with bid at significant premium
- Upon the rejection of friendly offer, Eureka advised shareholder group on
launching a proxy contest
- The process led to an auction of the Company, which was ultimately sold to
financial acquirer
- The Company's stock price appreciated 60% from the investor group's initial
investment in the stock over a 4-month period
Transaction Description
Brentwood Medical Products ("Brentwood") is a leading medical technology innovator that offers digital diagnostic medical devices through its IQmark product line. Because of its technology and future growth potential, Brentwood was considering either raising growth capital or merging with a strategic partner. Eureka was engaged to assist the Company with evaluating their strategic options and developing an appropriate strategy.
Eureka created an efficient and highly competitive auction process by identifying and entering into discussions with several potential acquirers. Through a focused, but competitive process, Midmark Corporation ("Midmark") emerged as the most synergistic buyer for Brentwood. As a global market leader in medical and dental examination tables, Midmark was able to bundle Brentwood's technology with its examination tables to enhance its product offering and expand Brentwood's installation base.
Testimonial
"Thanks again for doing such a great job of negotiating. I could not be happier with what Eureka was able to negotiate in the deal structure. If Eureka ever needs to use me as a referral, let me know, as you would get glowing remarks."
Del Freeman, President
Brentwood Medical Products
Transaction Description
De La Rue (London: DLAR) is the world's largest commercial security printer and papermaker, involved in the production of over 150 national currencies and a wide range of security documents, such as travelers checks and vouchers. Eureka was engaged to advise De La Rue on the sale of its wholly owned subsidiary, Sequoia Voting Systems ("Sequioa"), a leading provider of voting equipment systems, election print materials, software and election services in the United States.
On December 2, 2004, De La Rue announced its intention to sell Sequoia by the end of March 2005, providing Eureka with less than four months to identify and contact buyers, structure a transaction, complete buyer due diligence and close the sale transaction. The subsidiary had generated significant operating losses in prior years, but was well positioned to improve its near-term operating performance. Eureka identified Smartmatic, a network device company with election systems products sold outside of the United States that was looking to build a presence in the United States, which is the world’s largest voting systems market. Eureka completed the sale at an attractive valuation in slightly over three months, nearly three weeks ahead of the time frame publicly set forth by De La Rue.
Testimonial
"Three months ago, we approached Eureka to act as advisors on our sale transaction. It is a testament to your expertise and professionalism that we were able to achieve a very satisfactory sale so quickly, and such a natural fit with the purchaser. The deal represents an excellent outcome for Sequoia, our customers and employees. Thank you Eureka! Throughout each step of the process, and during difficult negotiations we knew we were able to count on your balanced input and advice."
Tracey Graham, President
Sequoia Voting Systems
Company Overview
Delphi Corporation ("Delphi"), the second largest automotive supplier in the world, with approximately $27 billion in sales, filed for Chapter 11 bankruptcy protection in October 2005. In December 2005, Appaloosa Management L.P., who held a 9.3% stake in Delphi at the time, filed a motion to appoint an official equity committee.
Assignment
White Case LLP on behalf of Appaloosa engaged Eureka to provide financial advisory assistance with its investment in Delphi. At the time Eureka was engaged, Delphi's stock was trading at $0.33.
Eureka's Contribution and Outcome
Eureka combined its experience in the automotive and industrial sectors with its restructuring expertise to develop its own views on value. We evaluated Delphi's current and projected financial performance, assessed potential recoveries for shareholders, and provided expert witness testimony. We analyzed complex issues including the current industry dynamics in the US and abroad, the ongoing viability of certain US manufacturing plants, the labor agreement with the UAW, pension and retiree health obligations. On 3/21/06, despite objections from many constituencies including Delphi, the Unsecured Creditors and others, the Bankruptcy Court approved the formation of an equity committee. The stock closed at $0.78 per share after the court's decision. As of March 12, 2007 Delphi stock traded at $2.46 per share
Company Overview
Integrated Health Services, Inc. ("IHS") was a leading provider of long-term care and respiratory care to patients nationwide. IHS filed for Chapter 11 bankruptcy protection in February 2000
Assignment Overview
The Official Committee of Unsecured Creditors engaged Eureka (first at Andersen and subsequently at Eureka) to provide strategic and financial advice on various alternatives and turnaround initiatives.
Challenges
-
Several constituents, including senior lenders, bondholders, vendors and
management had competing objectives
-
Several operating assets with significant value were trapped for complex
legal and operational reasons
-
$1 billion skilled-nursing facility chain was highly leveraged, unprofitable
and facing Medicare reimbursement cuts
-
Difficult negotiations with buyer of long-term care division
Solution
- Built consensus among creditor constituents to implement actions to
sell/spin-off operating assets
- Repaid creditors in full with interest.
- Implemented $1 billion spin-off of Rotech, $42.5 million sale of Litho and
sale of APS to U.S. Biosciences
- Implemented dual-track plan of reorganization to facilitate negotiations with
challenging buyer of long-term care business
- Sold long-term care business for $220 million
- In September 2003, Eureka was asked to assume the role of liquidating
trustee for the estate and still serves in this capacity
Company Overview
Kindred Healthcare, Inc. (NYSE: KND) is a publicly-traded healthcare services company with approximately $4.4 billion in sales. Kindred operates long-term acute care hospitals, nursing centers, institutional pharmacies and contract rehabilitation services. In October 2002, the stock price dropped from approximately $20 to $6 primarily due to professional liability costs related to the Company's Florida and Texas operations. The complexity of the Company's masterlease structure with its landlord, Ventas, made exiting these facilities difficult.
Assignment Overview
The Board of Directors engaged Eureka to provide strategic and financial advice on various alternatives.
Eureka's Contribution and Outcome
- Built consensus among the Board members to implement actions to
purchase facilities that it leased from Ventas in order to exit Florida and
Texas through a subsequent sale.
- Successfully negotiated two transactions with Ventas in 2003, which enabled
the Company to purchase all the underlying facilities. As part of these
transactions, the Company amended its master leases with Ventas.
- Upon the completion of the second transaction on 12/11/03, Kindred's stock
price reached $25.58.
Transaction Description
Lazy Pet Products ("Lazy Pet") is a leader in high quality pet bedding, pet toys and pet accessories. The company had entertained the idea of selling and had been approached by several potential buyers. Eureka was engaged to coordinate and expand the sales effort, advise on a valuation range and assist with the negotiations and transaction structure.
Testimonial
"When you work for 25 years building a business, selling it has the potential of being a traumatic experience. Eureka Capital came highly recommended; however, I have to admit, I was apprehensive and even reluctant to discuss intimate details, let alone have someone position the company for sale. After first meeting with Eureka, I knew they were professionals and had a great deal of experience. Most of all, they were real people. They took the time to walk me through the process from start to finish, explaining, in detail, the bumps in the road to expect before reaching the finish line. After working with Eureka through the entire process, I have gained an even higher level of respect for the company. I would highly recommend Eureka Capital to anyone who is considering a sale of their business."
Dennis Curley, President
Lazy Pet Products
Company Overview
National Home Health Care Corp. ("NHHC") provides home healthcare and staffing services with approximately $110 million of sales in New York, New Jersey, Connecticut and Massachusetts. Prior to the transaction, NHHC was a publicly-traded (NASDAQ: NHHC) healthcare services company.
Assignment Overview
Eureka partnered with Angelo Gordon to acquire and take private NHHC for approximately $75 million. Eureka initiated the transaction, led negotiations, coordinated due diligence, participated as a principal and raised the necessary debt financing to complete the transaction.
Eureka's Contribution and Outcome
Eureka had a long standing relationship with the company's management team as a result of its knowledge and past experience working within the home healthcare services sector. Eureka brought in Angelo Gordon and collectively invested approximately $14 million of equity. In addition, Eureka negotiated the terms of this transaction and raised $42 million in senior secured debt (consisting of term and revolver) and $8 million of seller financing in the form of a subordinated note. The transaction was successfully completed on November 21, 2007.
Company Overview
Pasternack Enterprises is a manufacturer, marketer and value-added distributor of coaxial, fiber optic connectors, adaptors, cables and other related electronic parts.
Assignment Overview
Eureka partnered with an industry executive to identify acquisitions in select sub-sectors of the aerospace and defense industries. Eureka was also engaged to raise the requisite capital to fund the acquisition.
Challenges
Seller had aggressive timetable for completing a deal. Discussions began shortly before two major holidays and vacation months, so coordinating schedules for both sides was challenging. There was limited availability of financial information, and it was critical to identify a financial partner that understood the industry and target's unique business model.
Solution
- Approached a very select group of private equity funds.
- Selected American Capital Strategies ("ACS") as the executive's financial
partner, given ACS's ability to provide the entire capital structure for the
buyout and deploy the internal resources required to complete due
diligence and the transaction quickly.
- ACS invested $89 million in the buyout of Pasternack Enterprises and
provided the executive with the opportunity to invest and continue to
increase his ownership in the future.
Client Testimonial
"While building our Cabin Management Group at DeCrane Aircraft Holdings Inc., we acquired two companies represented by Eureka. Both transactions involved unique and complex deal structures that required thoughtful and skillful negotiating tactics. While acquiring companies regularly through an aggressive acquisition program, we were seeing all kinds of seller representation, from the top investment banking firms through sole practitioners. Our team agreed that Eureka was one of the best. Their energy, experience, creativity and ethics closed two challenging transactions for Eureka's sellers that would have never been inked had Eureka not been on the scene."
Chuck Becker, New President
Pasternack Enterprises
Company Overview
Pearl Spirits is the importer and marketer of Pearl Vodka, a Canadian ultra-premium vodka sold nationally through bars, restaurants and retail.
Assignment Overview
Eureka was engaged to advise on various strategic alternatives such as raising outside capital or finding a strategic partner.
Challenges
-
Pearl was a single-brand company competing against larger, multi-brand
spirits companies
-
Vodka was a crowded and highly competitive category
-
Cost to differentiate your product and successfully break through the
"clutter" was substantial
-
Company was unprofitable and highly leveraged
-
Select unsecured creditors were becoming impatient
Solution
- David Sherman Corporation (DSC) is a $150 million in revenue private
spirits company that has built a solid track record of growing smaller or
orphaned brands.
- DSC was looking to build out a premium spirits portfolio to complement its
value brand business.
- DSC maintained a national sales force and strong relationships with
leading distributors.
-
Negotiated a sale/licensing agreement, whereby DSC would fund all
production and marketing for Pearl Vodka for five years in exchange for a
5-year royalty and option to purchase the brand.
Client Testimonial
"I wanted to take a few minutes and thank you for your support over the past ten months. Through it all, I knew I could count on Eureka Capital to be there with the necessary expertise to put a deal together and manage it to the closing. No doubt, as with any deal, there were some very difficult periods, and Eureka Capital maintained the highest degree of professionalism throughout the process. You should be proud of your company, your support team and your reputation in the marketplace."
Patrick Silvagnia, Chairman and CEO
Pearl Spirits, Inc
Transaction Description
Precision Pattern, Inc. ("PPI") specializes in the design, engineering, manufacture, certification and sale of interior furniture components for middle to high-end corporate jets. PPI had been approached to sell by a strategic buyer and engaged Eureka to manage the discussions and potential sale process.
A significant decrease in the buyer's public stock price resulted in the initial buyer postponing the transaction. During this time, Eureka approached DeCrane Aircraft Holdings ("DeCrane"), a highly acquisitive company that was majority owned by DLJ Merchant Banking Partners. DeCrane quickly recognized PPI's strategic value as the only independent company capable of meeting 100% of the furniture requirements for multiple middle to high-end production line aircraft, which was a perfect addition to DeCrane's Cabin Management Group. Consequently, Eureka was able to quickly negotiate and structure a transaction at a premium valuation for PPI.
Testimonial
"The transaction is finally over and successfully completed. It seems that we talked with each other almost daily over the last several months, and I shall miss those calls. Eureka taught me a lot, and I appreciate what I learned. What I want to say is that this transaction was as successful as it was only because of the Eureka team. Your professionalism and integrity are beyond reproach, and Eureka's tenacity and work ethic ensured the optimal outcome for PPI Holdings, Inc. and its shareholders."
Bill Allen, Chief Financial Officer
PPI Holdings, Inc.
Transaction Description
RJ Environmental Products ("RJ") offers multi-stage odor control systems and emergency scrubber systems for water and wastewater applications in the municipal and industrial markets. RJ had been approached to sell by U.S. Filter Corporation. RJ engaged Eureka to evaluate a pending offer and advise on the potential sale of the company.
The initial offer RJ received was well below market, which prompted Eureka to approach and initiate discussions with other strategic buyers. The company received indications from other buyers above the initial offer. The introduction of other buyers into the process resulted in U.S. Filter submitting a revised offer that appropriately reflected the intrinsic value of the company's unique and patented product offering.
Testimonial
"I had been approached by several companies wanting to buy my business. I had no idea what it was worth or how to go about putting together a transaction. Eureka was referred to me to assist with a possible transaction. They determined a value, negotiated the terms and coordinated the entire transaction, including recommending an experienced deal attorney. I could not have been happier with my deal. I have very high standards for my company, my employees and my advisors. Eureka exceeded my highest expectations. Furthermore, I gained a new friend in the process."
Roop Jain, President/Owner
R.J. Environmental, Inc
