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GS Capital Partners cracks Associated Asphalt for $400M

by Lisa Ward | Published February 14, 2012 at 6:25 PM

Goldman Sachs Capital Partners has agreed to buy Associated Asphalt Partners LLC, a Roanoke, Va., asphalt provider, in a $400 million secondary buyout that has not been announced.

KeyBanc Capital Markets Inc., leading the debt syndication for the leveraged buyout, went out to investors with price guidance for a $280 million senior secured debt facility on Tuesday, said James Hussney, vice president of KeyBanc's capital markets loan syndication. Commitments are due next week and the deal is expected to close in March. The facility comprises a $170 term loan due 2018 and a $90 million revolver.

New York's GS Capital, the private equity arm of Goldman, Sachs & Co., is buying the company from ArcLight Capital Holdings LLC with about $186 million of equity for a 95% stake, according to Moody's Investors Service. Management will retain 5%.

Moody's gave a B2 rating to the $280 million debt facility. "Associated's ratings are constrained by its small scale, relatively low margins, concentrated supplier base, integration risk, limited end-markets and geographic diversity, and its exposure to weak and volatile construction activity," Moody's said in a Feb. 13 note.

Founded in 1948, Associated Asphalt Partners owns storage facilities and sells asphalt used to construct and maintain the highways and roads. Operating primarily in the mid-Atlantic and southeastern United States, the company had revenues of $427 million for the 12 months ended Sept. 30, according to Moody's.

The term loan will have an original issue discount of 98 and will be priced between LIBOR plus 550 basis points to 575 basis points, with a LIBOR floor of 1.5%, said Hussney.

The debt package also includes a $20 million, delayed draw term loan due 2019. Proceeds from that facility will be used to finance an acquisition expected to close later this month, said Hussney, who declined to provide further details.

Representatives from GS Capital Partners and ArcLight did not immediately return calls.

HCI Equity Partners purchased Associated in December 2003, then sold it to ArcLight Capital in October 2006. Associated picked up an add-on, Tampa, Fla.-based E.A. Mariani Asphalt Co., for an undisclosed amount in 2007.

Moody's said Associated Asphalt has doubled in size since 2004. Its growth was driven primarily through a series of acquisitions, a trend the rating agency expects to continue.

The company will be leveraged at about four times debt to Ebitda once the deal is completed, Moody's said.

Asphalt is one of two new leveraged financings currently in the loan market. Since the credit markets turned skittish there has been more activity in refinancings aimed at either extending maturities or funding dividends to sponsors, than new buyout-related issuances. Besides Associated, Citadel Plastics Holdings Inc. is also raising a new facility for a leveraged buyout. By way of contrast, there are six sponsor-backed companies that have pending refinancing transactions.

The market for new issuances has been "anemic," said Hussney. "The pipeline still favors amend-to-extend deals."

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Tags: ArcLight Capital Holdings LLC | Associated Asphalt Partners LLC | Goldman Sachs Capital Partners | KeyBanc Capital Markets Inc. | Private Equity

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GS Capital Partners cracks Associated Asphalt for $400M

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