Bethesda, MD., -- American Capital Strategies Ltd. (Nasdaq:ACAS) announced today that an affiliate, "American Capital Acquisition," has signed a definitive purchase agreement to acquire the commercial and industrial decorative products business known as Borden Decor from Borden, Inc. for approximately $33 million. The transaction includes the purchase of Borden Decor's Columbus, Ohio plant, the operating assets of Borden Decor's St. Louis, Missouri facility and a two-year lease agreement for the St. Louis facility. The transaction is subject to certain contingencies and conditions prior to closing including American Capital Acquisition's successful negotiation of a new labor agreement with the Borden Decor employees.
Borden Decor is a leading manufacturer of decorative paper and vinyl surfacing materials used in a variety of industrial applications and commercial wallcoverings. Sales in 1997 were approximately $105 million.
The lease agreement with Borden also allows American Capital Acquisition to continue consideration, initiated by Borden Decor, of building a new manufacturing plant in Columbia, Illinois.
ACAS will team up with the management and employees of Borden Decor to own the business. ACAS expects to invest $15.5 million in the transaction in the form of senior subordinated debt, junior subordinated debt with detachable warrants and equity. Additional debt financing is expected to be provided by third parties. Management and employees are expected to own a majority of Borden Decor principally through an Employee Stock Ownership Plan ("ESOP") and ACAS will own the balance.
John Ireland, a Principal of American Capital Strategies commented, "UNITE (the Union of Needletrades, Industrial and Textile Employees), the union that represents a large portion of the Borden Decor employees, brought this company to the attention of ACAS due to our prior successful work with the union and in recognition of our position as a leading firm in the United States in structuring and funding employee buyouts. UNITE was concerned that the potential sale of Borden Decor to any buyer already in the business could lead to job loss through closure of the Borden Decor plants by the new owner. An employee buyout sidesteps that risk."
UNITE represents 300,000 workers in apparel, textile, distribution centers and a wide range of light manufacturing. "UNITE has been involved in a number of very successful ESOPs with ACAS and we look forward to working with the employees of Borden Decor," said Jay Mazur, President of UNITE. "Progressive trade union leaders have found that ESOPs can provide a unique opportunity for managers, salaried employees and bargaining unit members to cooperate together in ways that are inconceivable without the component of employee ownership," Mazur added.
"Today's agreement should be a winner for everyone involved," said C. Robert Kidder, Borden, Inc. Chairman and Chief Executive Officer. "For associates, Borden Decor is being sold not only as an ongoing operation, but also as one in which associates would share ownership, and thus directly benefit along with American Capital Strategies from success in running it profitably."
American Capital Strategies' President and CEO Malon Wilkus said, "This transaction clearly demonstrates the strengths and abilities of ACAS to structure win-win transactions for both the sellers of businesses and their employees. ACAS' ability to partner with the Borden Decor employees has created an excellent transaction whereby all the employees become stakeholders in the future of the Borden Decor business."
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