American Securities LLC on Friday signed a $1 billion agreement to buy Global Tel*Link Corp. from rival New York buyout firm Veritas Capital, a person familiar with the matter said.
The target's owners and creditors will receive $950 million at closing and an additional $50 million if certain contingencies are met, the source said. No formal deal announcement will be issued, the source added.
Veritas declined to comment. Neither American Securities nor Global Tel*Link returned phone calls.
Veritas, an 82% owner, stands to reap more than a 325% gain on its $115 million, nearly 3-year-old investment in the Mobile, Ala.-based provider of telecom services to federal prison inmates. GS Direct LLC, an investment arm of Goldman, Sachs & Co., will earn a similar return on its $15 million outlay.
The sellers retained Goldman and J.P. Morgan Securities LLC in June to help auction the company, sources previously said. Schulte Roth & Zabel LLP was counsel to Veritas. American Securities emerged as the probable buyer some weeks ago.
New York-based American Securities, founded in 1947 by William Rosenwald, an heir to the Sears, Roebuck fortune, will put up 35% of the purchase price as equity, with Credit Suisse Group, UBS, Nomura Securities International Inc. and General Electric Co. providing senior debt, sources said..
The transaction's $1 billion face value is 6.7 times Global Tel*Link's expected 2011 Ebitda of $150 million.
Veritas and GS Direct teamed in February 2009 to buy Global Tel*Link for $345 million from Los Angeles private equity firm Gores Equity LLC. They've bolstered the company with add-on acquisitions, buying Digital Solutions Inc. in June 2010 and Public Communications Services Inc. last November.
Late last year, Veritas and GS Direct recouped their original investments via a debt funded dividend.
The sale is Veritas' second in recent weeks. In late September the firm, which invests chiefly in government contractors, completed the $960 million sale of health informatics and data services supplier Vangent Holding Corp. to General Dynamics Corp.
Veritas, which sank $157 million in Vangent four and a half years ago, garnered about a 240% profit, financial filings indicate.
In its most recent deal, in June American Securities' Nashville-based clinical services provider, SpecialtyCare, made an add-on acquisition of Advanced Perfusion Care Inc.
-- Lisa Ward contributed to this report.