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FOR IMMEDIATE RELEASE:
March 27, 2000
A&M CLEANING PRODUCTS MOVING
AS FAST AS "GREASED LIGHTNING"
by Maureen Flanagan
Backed by a new, seasoned management team and growth oriented investors, Greased Lightning, a multipurpose cleaner and degreaser manufactured by A&M Cleaning Products, Inc., is poised to transform a regional success story into a leading national brand. Based in Clemson, South Carolina, the company is penetrating new distribution channels and expanding into geographic regions throughout the United States. With the product now positioned for broader distribution through national merchandisers Wal-Mart and Kmart, the company is rapidly developing a national sales presence.
Behind this explosive growth is a new, professional management team that joined the company prior to the close and officially took control of the company in a March 27, 2000 buyout. Bringing proven relationships with retailers and years of successful consumer products experience, the new management team is dramatically expanding the Company's penetration of Wal-Mart, K-Mart, and other big box retailer accounts.
American Capital Strategies, Ltd. (Nasdaq: ACAS) supported the buyout, investing $7 million in subordinated debt and preferred stock to enable A&M realize its tremendous opportunity for growth and expansion.
"This buyout enables A&M to go national with a highly successful consumer product we feel has only begun to realize its potential," said Jerry Peters, the company's new CEO and President.
The company's product, Greased Lightning, is a household cleaner with many different uses. It cleans fiberglass tubs, bathrooms, tires, boats, carpets and more, removing grease, grime, mildew stain and soap scum "like a bolt of lightning." Moreover, it contains no acid or bleach, will not erode surfaces and is biodegradable. Available in a 32-oz. pump spray bottle and two refill sizes - a 64-oz. and 128-oz. bottle - Greased Lightning is sold wholesale and to retailers primarily in the company's core markets in the southeastern United States. The company also enjoys distribution in the Southwest and New England.
The Greased Lightening story began in 1985 when Lamar Merck, an inventor, stumbled across the formulation for the product while developing a windshield cleaning agent. He teamed up with Ken Alexander, who became the company's president, and they developed a business, mostly through word-of-mouth advertising. They also promoted the brand at automobile racing events, with A&M sponsoring and controlling the regional cable broadcast of the American Speed Association stock car race. Even though the marketing focus was narrow, the brand developed a loyal motor sport following that translated into steady sales growth.
One of A&M's biggest strengths was the brand's product formulation and aggressive performance characteristics suggested by its the name. In addition to race car drivers, the product appealed to consumers who didn't have a lot of time to spend removing dirt and stains and wanted immediate results for their cleaning efforts. Consumers, in fact, have always been tremendously pleased with the product, attesting that Greased Lightning outperformed other household cleaners in its class. This high level of consumer satisfaction is supported by the product's strong regional market share -- and the fact that half the company's sales are refill units. In 1999 alone, A&M's sales increased 31%, propelled by growing brand awareness and popularity that enabled management to expand accounts to major food chains and mass merchandise outlets.
Despite its relatively low national distribution, Greased Lightning has performed well in overall market ratings for all-purpose cleaners and disinfectants. In 1999, it ranked number 12 in food stores and number 13 in mass merchandise outlets. This acceptance beyond its regional market comes, in fact, just as the company takes the first significant steps toward developing a national sales presence. In February 2000, Greased Lightening appeared in 1,241 Wal-Mart stores, a big jump over the 500 in 1999. This is more than 50% of all Wal-Marts in the company's core Southern and Southeastern regions. In these stores, Greased Lightning gained permanent placement in the stores' household cleaning products sections. The roll-out is supported by an aggressive promotion campaign, with trial sizes of Greased Lightning available near check-out counters.
"The new management team has hit the ground running," said John Thornton, American Capital Principal. "This team of highly incentivized industry veterans, with many decades of directly relevant sales, marketing, manufacturing and merchandising experience from competitive and comparable brands, brings extensive industry knowledge, contacts and experience and puts the company in a great position for future growth and acquisitions. They recognized an opportunity to bring professional management skills to a company that has a great product and great growth opportunities. We are looking forward to a long-term partnership as A&M forges ahead with its growth plans."
To accomplish the buyout, American Capital provided $6 million of senior subordinated debt and $1 million in preferred stock as part of a total $19 million financing package. Wachovia Bank provided the senior term loan and a revolving credit facility. The acquisition is being led by Business Growth Partners, a Southern California based private equity group which invested $3 million for the balance of the preferred stock.
American Capital has structured and financed buyouts in a wide range of industries, including manufacturing, transportation, construction, information technology, wholesale retail, media, healthcare, telecommunications and services. In 1999 American Capital executed a record number of buyouts for the company, investing $176 million in 24 transactions. Working in the underserved middle segment of the economy, American Capital supports strong entrepreneurial individuals and teams with the right blend of management expertise and industry background.
A&M's new senior management has the depth and breadth of experience to quickly develop the brand and grow the company across the United States. The new management team is led by President and CEO Peters and Vice President of Sales Jerry Murbach, each a seasoned executive with over 20 years of experience in the consumer products industry. Peters and his team have extensive contacts with senior executives at most national and large regional retailers.
With the company's recapitalization and new management, A&M's prospects look bright. Americans spend over $1 billion every year for household cleaning products. Although most of these products are sold in food and drug stores, sales in the non-food "alternative" channels such as mass merchandise and automotive stores have grown more quickly. Seeking to capitalize on this growth, A&M will focus its marketing efforts in this area, anticipating success similar to other products that achieved rapid sales growth within alternative sales channels.
Consumer satisfaction will continue to be a key selling point. As the brand gains wider national exposure, A&M is optimistic that Greased Lightning will be a staple cleaning product in bathrooms, kitchens, boat sheds and garages across the country.
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