Royalty Financing Solution Provides Growth Capital to Manufacturer in Rural Washington
11/17/2011
Arctaris Press Release
BOSTON, November 16, 2011 – Arctaris Income Fund, LP, and Merion Investment Partners II, LP, have provided an innovative form of royalty debt financing to Amtech LLC, a fiberglass components manufacturer based in the State of Washington.
The $5.5 million financing provides Amtech with capital to expand its current base of 170 full-time employees, meet rising customer demands, and acquire complementary fiberglass producers. This innovative royalty financing is structured as a five-year loan which pays a base interest rate plus a “royalty” on future sales growth as the company expands.
“With the new funding, our business can afford to grow faster and make acquisitions without giving up equity,” said Douglas Christie, CEO of Amtech. “We looked at a lot of other lenders and they all just seemed to want to take a piece of our company.”
Unlike a traditional subordinated debt financing, the royalty debt structure is non-dilutive to the company’s equity owners. Additional benefits of this structure include a competitive cost of capital, long repayment period, and no pressure on the owners to sell the company.
Arctaris was joined in the transaction by co-investors Merion Investment Partners II, L.P., a Radnor, Pennsylvania-based subordinated debt fund, and by Arctaris Co-Investment LP. Amtech is majority owned by Blackford Capital LLC, a private equity firm based in Grand Rapids, Michigan, which injected new equity simultaneously in this transaction.
“Amtech touches upon all the positive aspects that Arctaris seeks in its investments,” said Jonathan Tower, General Partner with the Arctaris Income Fund. “The company has a long and established track record of profitability, low leverage ratios, experienced management team, and significant equity base.”
Amtech’s location in Wapato, WA, on the Yakama Indian Reservation, fits within Arctaris’s commitment to investing in underserved markets and filling the void left by many regional banks. The $5.5 million transaction will be delivered in two tranches, timed to coincide with the company’s acquisition and organic growth plans.
About Arctaris Income Fund
Arctaris Income Fund provides innovative and non-dilutive royalty debt financing to middle market companies. With offices in Waltham, Massachusetts, and Detroit, Michigan, the Fund has an emphasis on expansion-stage companies located in rural and economically distressed regions and other underserved banking markets. The managers of the Fund have over 50 years of private equity and venture capital experience, having funded more than 3 dozen companies, as well as entrepreneurial, operating and consulting experience. For more information, please visit www.arctaris.com
About Merion Investment Partners
Merion Investment Partners is a lower middle-market mezzanine capital fund licensed as a Small Business Investment Company (“SBIC”). With over $200 million under management, Merion invests mezzanine debt and equity in companies to support organic growth, acquisitions, buyouts and generational transfers of ownership. Merion provides junior capital to private equity led buyouts as well as to entrepreneurs for growth capital and acquisitions. Preferred industries include healthcare, technology-enabled business services, information technology, and specialty manufacturing. For more information, please visit www.merionpartners.com
About Blackford Capital
Blackford Capital is a private equity firm based in Grand Rapids, Mich., that acquires, manages and builds middle-market manufacturing, distribution and service companies, with portfolio holdings based in six states employing more than 800 people and combined revenues of approximately $200 million. Blackford has offices in Grand Rapids, Mich. (headquarters) and San Francisco, Calif. For more information, visit www.blackfordcapital.com
About Amtech
Recognized as one of the fastest-growing and most innovative, small businesses in the State of Washington, Amtech is a manufacturer of diverse fiberglass composite-based products. With expertise in design, engineering, and R&D, Amtech distributes its products in both military and commercial markets. Established in 1987, Amtech employs a growing workforce of skilled technicians, working in specialized plants encompassing more than 170,000 square feet. The company’s talents include fiberglass, resin transfer molding, vacuum assist resin transfer molding, large and small vacuum-form plastics capabilities, finishing, value-added assembly, and custom packaging. Amtech is an ISO 9001:2008 company.