Castle Harlan Agrees to Sell AmeriCast for US$288 Million to Bradkenadmin
Castle Harlan, Inc., the New York private equity investment firm, announced that it had agreed to sell AmeriCast Technologies, Inc., a North American leader in the design and manufacture of large, complex steel castings, to Bradken Ltd., a leading publicly-traded Australian manufacturer of cast steel and other products, primarily for the mining and railroad industries, in a transaction valued at approximately US$288 million.
AmeriCast, based in Atchison, Kansas, has manufacturing facilities there and in St. Joseph, Missouri; Tacoma and Chehalis, Washington; Amite, Louisiana, and London, Ontario, as well as a trading office in Xuzhou, China. The company designs and manufactures large, highly engineered ferrous sand castings, machined components and assemblies for major companies in the energy, mining, railroad and mass transit industries. The majority of the company’s products weigh over 10,000 pounds, with the largest weighing in excess of 50,000 pounds.
Howard Morgan, a senior managing director at Castle Harlan who leads the firm’s AmeriCast team, said, “AmeriCast has been an excellent investment for Castle Harlan and its limited partners, and we are pleased that we have been able to add significant value to the company during our 21-month period of ownership. Annual EBITDA has grown more than 100 percent through both organic growth and strategic acquisitions. We’re confident this growth will continue.”
Based on the value of this transaction, Castle Harlan and AmeriCast management will realize a collective gain of more than three times on their original invested capital, which represents an IRR of more than 90 percent, Morgan said.
The transaction has received Hart-Scott-Rodino Act governmental approval and is expected to close in the next week. The Company’s 11% Notes Due 2014 will remain outstanding after completion of the transaction, in accordance with the terms of the indenture governing the notes.
Bradken had purchased a 19 percent minority equity interest in AmeriCast when Castle Harlan acquired a controlling stake in the company in November 2006. Until it went public in August 2004, Bradken had been a portfolio company of Castle Harlan’s Australian affiliate CHAMP Private Equity in Sydney. Bradken is based in Newcastle, New South Wales, about 90 miles north of Sydney. Bradken currently has revenues of approximately US$800 million. Please refer to its website at www.bradken.com.au.
“We know Bradken very well and have had long relationships with its CEO Brian Hodges, Chairman Nick Greiner, and many of the senior Bradken management team,” Morgan said.
Anand Philip, a senior associate who led Castle Harlan’s negotiating team on this transaction, adds, “We are confident that, under Bradken’s leadership, the company will continue to prosper. Post closing, we intend to support Bradken in its effort to grow AmeriCast and its business in North America.” He added that during Castle Harlan’s ownership, “we more than doubled growth and productivity-related capital expenditures that should continue to benefit AmeriCast in coming years.”
After acquiring AmeriCast in November 2006, Castle Harlan assisted the company in purchasing Atlas Castings and Technology in April 2007 and A.G. Anderson in April of this year. Atlas makes large specialty steel castings for the energy and defense industries; A.G. Anderson produces castings in stainless steel and complex ferrous alloys, primarily for the energy industry. In January 2008, Castle Harlan assisted the company in divesting its Prospect division, which had been identified as non-core to the AmeriCast business.
Taking account of those acquisitions and the divestiture, AmeriCast is expected to have total revenues and EBITDA this year of more than US$340 million and US$47 million, respectively. When Castle Harlan purchased the company in November 2006, its revenues were below US$200 million.
Demonstrating the successful lasting relationship among the parties and their community involvement, Castle Harlan and AmeriCast have agreed to contribute US$600,000 to endow the Castle Harlan-AmeriCast Scholarship Fund, which will be dedicated to providing need and merit-based educational scholarships to the children of AmeriCast’s approximately 2,000 employees.
Castle Harlan, founded in 1987, invests in controlling interests in the buyout and development of middle-market companies in North America, Europe and, together with CHAMP Private Equity, in Australasia. Since inception, Castle Harlan has invested in 49 companies representing more than US$9 billion in enterprise value. Please refer to its website at www.castleharlan.com.
Castle Harlan’s current portfolio companies, which employ more than 42,000 people, include Baker & Taylor, the leading global distributor of books and entertainment products to libraries and retailers; United Malt Holdings, one of the world’s largest producers of malt for use in the brewing and distilling industries; and Anchor Drilling Fluids USA, Inc., the nation’s largest independent provider of drilling fluids and fluid-handling services for onshore oil and gas drilling.
CHAMP Private Equity was formed in 2000 as Castle Harlan Australian Mezzanine Partners by the founders of CHAMP Private Equity’s predecessor and Castle Harlan. CHAMP Private Equity and its predecessor have made more than 60 investments since 1987 in companies operating in Australia and New Zealand. CHAMP Private Equity currently maintains offices in Sydney, Australia and Singapore. Please refer to its website at www.champmbo.com.
CHAMP Funds have acquired and successfully exited from investments in a variety of sectors, including Austar United Communications, the satellite TV broadcaster for most of Australia, Australian Pacific Paper Products, Australia’s second largest manufacturer and distributor of disposable diapers and adult incontinence products, and Penrice Limited, the only producer of soda ash in Australia.
Current CHAMP portfolio companies include: International Energy Services, Manassen Foods, Healthcare Australia, Study Group International, United Malt Holdings and Blue Star Print Group Limited.
The combined worldwide funds under the management of Castle Harlan and CHAMP Private Equity exceed US$4.5 billion.
If you have any questions about the AmeriCast transaction, please contact Chuck Storer at +1-212-371-2200, or Howard Morgan or Anand Philip at +1-212-644-8600.
Web site: http://www.castleharlan.com
Source: Castle Harlan, Inc.