PE Deals of the Year
The scourge of Chapter 11 touched fewer private equity-backed companies (including European assets) last year despite the slow economic recovery. Since 2009, when 100 companies fell victim to the Great Recession, the numbers have been improving. By The Deal magazine's reckoning, some 42 companies with private equity money rolled into bankruptcy court (see table, page 43), lower than the 2010 tally of 69. Last year's total was commensurate with the level in 2008, when the global financial crisis began.
The precise amount of equity that evaporated is, as always, difficult to ascertain. The vast majority of investments involved in the list for 2011 were not disclosed.
One glaring exception was Terra Firma Capital Partners Ltd.'s investment in British music company EMI Group Ltd., estimated at north of $2.5 billion and said to be as much as $2.7 billion. EMI, owned by Guy Hands' London firm, fell into Citigroup Inc.'s hands Feb. 1, 2011, in an asset grab by the big bank. Maltby Investments Ltd., EMI's London holding company, was placed in a prepackaged administration to execute the recapitalization under Citigroup.
Terra Firma's and Guy Hands' losses dwarfed all others'. At $2.7 billion the amount would be roughly equal to the rest of the potential equity losses put together for the year. The largest U.S. loss was $435 million, incurred by Cerberus Capital Management LP from paper producer NewPage Corp. of Miamisburg, Ohio, a company that struggled for a long time under its debt structure.
There were also repeat offenders. Anchor Blue Inc., a Corona, Calif., casual-clothing retailer, first filed in May 2009. The second, HomeForm Group Ltd., a U.K. home improvement retailer, went into administration in 2007. Both were owned by Sun Capital Partners Inc. and affiliates. The private equity turnaround specialist put a total of five portfolio companies into Chapter 11, more than any other PE firm.
|The fallout PE-backed bankruptcies in 2011|
|Company (Sector)||Deal value ($M)||Equity investment ($M)||Acquisition date||Sponsor(s)||Bankruptcy filing date||Assets ($M)||Liabilities ($M)|
|Jobson Medical Information Holdings LLC (Media)||NA||NA||4/7/05||Wicks Group of Cos. LLC||2/12/11||$108.6||<$108.6|
|Anchor Blue Inc. (Retail)1||$140.0||NA||6/20/09||Sun Capital Partners Inc.||1/12/11||24.7||38.5|
|Appleseed's Intermediate Holdings LLC (Retail)||176.3||NA||1/23/07||Golden Gate Capital||1/19/11||100.0-500.0||500.0-1,000.0|
|Summit Business Media Holdings Co. (Media)||NA||NA||10/9/06||Wind Point Partners||1/25/11||99.7||246.0|
|Maltby Investments Ltd./EMI (Entertainment)||6,100.0||$2,500.0||5/21/07||Terra Firma Capital Partners Ltd.||2/1/11||848.3||946.6|
|MK Network LLC (Healthcare)||NA||NA||NA||Triton Pacific Capital Partners LLC||2/16/11||>10.0||>10.0|
|Zangle Inc. (Software)||NA||NA||NA||Vermont Equity Partners LLC||3/17/11||11.4||6.5|
|Harry & David Holdings Inc. (Retail)||253.0||82.6||4/5/04||Wasserstein & Co. LP||3/28/11||304.0||361.0|
|Sbarro Inc. (Retail)||450.0||120.0||11/27/06||MidOcean Partners LP||4/4/11||471.0||486.5|
|LV Kapolei 54 LLC (Real estate)||18.0||15.3||2/22/05||HG Capital LLC||4/8/11||35.0||23.9|
|Berkline/BenchCraft Holdings LLC (Manufacturing)||NA||>6.0||5/11/07||Sun Capital Partners Inc.||5/2/11||20.6||243.8|
|Caribe Media Inc. (Media)||NA||NA||1/1/06||Welsh Carson Anderson & Stowe||5/3/11||3.6||18.6|
|Focus (DIY) Ltd. (Retail)||388.9||>1.0||1/18/07||Cerberus Capital Management LP||5/5/11||NA||396.0|
|Sigg Switzerland (USA) Inc. (Manufacturing)||NA||NA||11/00/03||Riverside Co.||5/20/11||2.3||13.0|
|H.S. of Delaware LLC (Retail)||NA||31||5/20/02||American Capital Ltd.||6/2/11||<1.0||39.3|
|Signature Styles LLC (Retail)||21.7||NA||5/18/09||Patriarch Partners LLC||6/6/11||48.6||87.6|
|Perkins & Marie Callender's Inc. (Restaurant) 2||>150.0||NA||4/11/06||Castle Harlan Inc.||6/13/11||289.9||440.8|
|Moventas Oy (Renewable energy)||NA||NA||1/29/07||IK Investment Partners Ltd. (fka Industri Kapital)||6/14/11||NA||NA|
|Habitat UK Ltd. (Retail)||NA||NA||12/14/09||Hilco UK Ltd.||6/24/11||NA||NA|
|DSI Stores Inc. (Retail)||395.0||122.5||7/27/07||Lee Equity Partners LLC||6/26/11||124.4||270.1|
|Jane Norman Ltd. (Retail)||173.7||NA||7/20/05||Baugur Group hf; Kaupthing Bank hf||6/27/11||NA||223.0|
|Nebraska Book Co./NBC Acquisition Corp. (Publishing)||110.0||110.0||2/13/04||Weston Presidio||6/27/11||657.2||563.9|
|HomeForm Group Ltd. (Retail)1||NA||NA||4/11/07||Sun European Partners LLP||7/6/11||NA||>37.0|
|Manistique Papers Inc. (Manufacturing)||NA||NA||11/30/06||Merit Capital Partners||7/12/11||19.7||224.6|
|PTL Holdings LLC (Transport)||NA||NA||6/28/09||Angelo, Gordon & Co.; Coda Capital||8/23/11||<50.0||>100.0|
|Pace American Enterprises Inc. (Manufacturing)||NA||NA||6/29/10||Sun Capital Partners Inc.||8/31/11||>7.0||>18.0|
|NewPage Corp. (Manufacturing)||2,300.0||435.0||1/25/05||Cerberus Capital Management LP||9/7/11||3,400.0||4,200.0|
|Alexander Gallo Holdings LLC (Legal services)||NA||NA||9/25/08||Accel-KKR LLC||9/7/11||207.5||258.0|
|SSI Group Holding Corp. (Restaurant)1||NA||NA||6/18/09||Saunders Karp & Megrue||9/14/11||23.9||47.5|
|Graceway Pharmaceuticals LLC (Pharmaceuticals)||875.0||NA||11/9/06||GTCR Golder Rauner LLC||9/29/11||37.4||859.5|
|Real Mex Restaurants Inc. (Restaurants)||359.0||199.0||1/18/06||Sun Capital Partners Inc.||10/4/11||272.2||250.0|
|Chef Solutions Holdings LLC (Catering)||130||>24.0||5/27/04||Questor Management Co. LLC; Mistral Equity Partners||10/4/11||994.7||167.7|
|Friendly Ice Cream Corp. (Restaurants)||337.2||126.4||6/18/07||Sun Capital Partners Inc.||10/5/11||122.3||349.6|
|Open Range Communications Inc. (Broadband)||>100.0||100.0||1/9/09||One Equity Partners||10/6/11||1,140.0||1,100.0|
|InPhase Technologies Inc. (Data storage)||NA||NA||NA||Madison Dearborn Partners LLC; venture capital firms||10/18/11||86.5||12.8|
|MF Global Holdings Ltd. (Brokerage)||48.0||48.0||5/20/08||J.C. Flowers & Co. LLC||10/31/11||41,050.0||39,680.0|
|Blitz USA Inc. (Manufacturing)||NA||NA||9/21/07||Kinderhook Industries LLC||11/9/11||36.2||53.1|
|Manroland AG (Printing)||1,200.0||>650.0||1/1/06||Allianz Capital Partners GmbH||11/25/11||NA||NA|
|TMP Directional Marketing LLC (Business services)||80.0||NA||5/2/05||Audax Group LP||12/5/11||65.3||134.8|
|Northampton Generating Co. LP (Utility)||115.0||NA||9/1/07||Energy Investors Funds||12/5/11||205.1||121.5|
|ALC Holdings LLC/American Laser Centers (Hair removal clinics)||NA||NA||12/10/07||Code Hennessy & Simmons LLC; Edgewater Funds; SAC Capital Advisors LP||12/8/11||>50.0||>100.0|
|Sportcraft Ltd. (Retail)||NA||NA||10/1/03||Wasserstein & Co.||12/30/11||>10.0||>10.0|
| 1 Chapter 22 filer.
2 Castle Harlan bought Restaurant Co. in 2005 for $150 million, then combined it in 2006 with Marie Callender's Restaurant & Bakery for an undisclosed amount.
NA = Not Available
Source: The Deal Pipeline