Transaction Case Study Hercules Transaction Case Study The Hercules Tire Rubber Company “Hercules” or the “Company” i
Morgan Keegan Indemnification Agreement document sample
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Transaction Case Study Hercules Transaction Case Study The Hercules Tire & Rubber Company (“Hercules” or the “Company”) is a leading marketer and distributor of replacement tires in the United States, Canada and internationally in over 75 countries. Hercules, headquartered in Findlay, Ohio, evolved from its roots as a private brand purchasing cooperative to include extensive networks of regional distribution centers in the The Hercules Tire & Rubber Company U.S. and Canada through the Company’s Tire Dealer’s Warehouse and Tire Specialists has been acquired by divisions, and the largest independent tire exporter in North America through its Treadway Exports division. Additionally, the Company’s Hercules private brand program is one of the most highly regarded and sought after proprietary private brand programs in the replacement tire industry. Partnering with FdG will enable Hercules to strengthen its financial base, further develop its private label program, solidify its position in the distribution of private label and branded tires, and capitalize on growth opportunities. FdG Associates Morgan Keegan’s Role the undersigned served as financial advisor to Morgan Keegan served as financial advisor to Hercules in connection with this transaction. The Hercules Tire & Rubber Company Morgan Keegan developed, managed and executed a competitive process that included the preparation of marketing materials, identification of and introduction to potential strategic and MORGAN KEEGAN financial investors, facilitating due diligence, as well as negotiating, structuring and closing the transaction. Morgan Keegan was highly successful in communicating the value that would be unleashed upon transitioning from the legacy cooperative structure to a fully profit driven, regional distribution model. Morgan Keegan was successful in negotiating a substantial working capital adjustment from prospective bidders based on the Company’s current level of working capital versus ongoing working capital requirements. Additionally, deferred compensation and change of control payments upon closing triggered a significant operating loss, providing the buyer with substantial current and future tax savings. Morgan Keegan was successful in negotiating the value of these savings as an addition to the total purchase price. Transaction Case Study Edgen Transaction Case Study Edgen is a leading global distributor of specialty steel pipe, fittings and flanges for use in niche applications. The Company is the market share leader and preferred distribution channel for these products, with an unparalleled network of vendor relationships, a consistently high level a Harvest Partners of customer service, an unmatched breadth of specialty inventory and a diverse base of portfolio company industry-leading customers. The Company’s products are primarily used in infrastructure expansion, economic extensions of existing facilities or maintenance and repair projects by has been acquired by companies in the oil and gas, power generation and process industries. Morgan Keegan was retained as financial advisor to Harvest Partners on the sale of the Company. Morgan Keegan’s Role Jefferies Capital Partners Morgan Keegan ran a controlled process, contacting almost 300 prospective buyers and presenting a persuasive case for an acquisition of the Company by each individual buyer. We the undersigned served received substantial market interest in Edgen, so we emphasized valuation significantly in the as financial advisor to early stages of the process. We ultimately received 10 initial indications of interest, 3 strategic Edgen Corporation and 7 financial sponsors, in a tight range. From this group, we invited 5 parties to visit facilities, sit in management meetings, conduct due diligence and negotiate a definitive MORGAN KEEGAN agreement. Because there were certain issues that had arisen in the industry in general and the Company’s operations in particular since distribution of the descriptive materials to buyers, Morgan Keegan recommended to the Board of Directors that we pause the process for a 2- week period. During this time, Morgan Keegan prepared an information supplement positioning these circumstances. We also facilitated increased valuations by more than $7 million subsequent to initial indications of interest (15% increase in equity value), obtained substantial concessions on economic terms of the definitive agreement and solidified financing with an effective bridge commitment on a high yield debt offering. At the end of the process, Morgan Keegan exceeded Harvest’s initial valuation parameters and the estimated valuation range materially. Transaction Case Study AmerCable Transaction Case Study AmerCable Incorporated is a leading designer, manufacturer and marketer of jacketed electrical cable products used in extreme operating environments, including mining, offshore oil and gas and a variety of specialty industrial applications. AmerCable targets markets that a Wingate Partners place value on specialized solutions rather than commodity markets. The Company’s products portfolio company are designed to exceed exacting industry and customer specifications for a variety of physical properties such as flexibility, tensile strength, abrasion resistance, heat and flame resistance, has been acquired by low smoke and halogen free emissions. Morgan Keegan’s Role Wingate Partners and AmerCable management engaged Morgan Keegan to recapitalize the Industrial Growth Partners business in order to provide Wingate with liquidity for its investment. AmerCable management, who in 2002 partnered with Wingate to acquire the AmerCable division from Associated the undersigned served Materials, sought to maintain a significant ownership interest in the Company going forward. as financial advisor to Morgan Keegan ran a controlled process, contacting over 150 prospective financial buyers and AmerCable Incorporated soliciting initial indications of interest from 15 equity sponsors. From this group, we invited 6 parties to visit facilities, attend management meetings and conduct due diligence. We MORGAN KEEGAN received letters of intent from all 6 parties. After selecting a financial sponsor, Morgan Keegan actively managed the confirmatory due diligence process and negotiation of a definitive agreement. Due to the exercise of management stock options at closing, AmerCable incurred additional compensation expenses which resulted in a significant operating loss at closing and provided the buyer with substantial current and future income tax savings. Morgan Keegan was successful in negotiating the value of these savings as an addition to the total purchase price. Additionally, we were successful in negotiating the replacement of escrowed cash at closing for indemnification of future losses with the proceeds from the income tax savings. This provided Wingate and management with maximum cash proceeds at closing. Morgan Keegan was highly successful in managing a competitive and controlled process and successfully exceeded Wingate’s preliminary valuation expectations for the business.