Investcorp joins Harvest on AMH platform

Harvest Partners takes money off the table in the $268m recapitalization of AMH Holdings, a manufacturer of exterior building products, less than one week after its acquisition of Levlad, a personal care products company.

New York-based private equity firm Harvest Partners today announced an agreement with Investcorp to recapitalize Harvest portfolio company, AMH Holdings, a manufacturer of exterior residential building products. The deal caps off what has already been a busy holiday season for Harvest Partners, which completed its acquisition of personal care products company, Levlad, earlier this month.

Under the terms of the AMH deal, global private equity firm Investcorp will purchase $150 million (€112 million) of convertible preferred stock from the existing shareholders, led by Harvest Partners and including co-investors Weston Presidio, the San Francisco-based private equity firm. 

The company will also increase its senior credit facility by $42 million and issue $75 million of senior notes to finance $118 million of shareholder dividends and management payouts. Upon completion of the transaction, Investcorp will share equal voting interest in the newly formed parent company with AMH’s existing shareholders. The deal is expected to close by the end of 2004.

This most recent recapitalization represents the second liquidity event for Harvest Partners’ investment in AMH. Through an offering of senior discount notes in March, the company generated net proceeds of $258 million.  AMH reportedly used that cash to redeem $177.5 million of preferred stock and distribute a $59 million dividend to stockholders. 

AMH’s operating subsidiary, Associated Materials Incorporated, is a manufacturer and distributor of exterior residential building products with net sales of $820.3 million for the first nine months of 2004. Harvest originally acquired Associated Materials in a $436 million public-to-private transaction in early 2002. That deal was the first investment for Harvest Partners IV, a $558 million fund that closed in July 2002. 

The current deal marks the first time that Harvest has partnered with Investcorp, a global investment group with offices in New York, London and Bahrain. Investcorp, established in 1982, currently manages total investments in alternative assets of approximately $8.6 billion.  Christopher Stadler, head of Investcorp North American corporate investment, and Ira Kleinman, senior managing director of Harvest Partners, led the deal for each firm, respectively.

Michael Caporale, AMI’s president and chief executive officer since the Harvest acquisition, will also assume the title of chairman of the board of directors.

Citigroup Global Markets served as financial advisor to AMI and, in conjunction with UBS Securities, will act as joint lead arranger to the new credit facility.

In related news, last week Harvest completed its fourth acquisition of the year with the buyout of Chatsworth, California-based personal care products manufacturer Levlad and its subsidiary, Arbonne International. Although terms of the transaction were not disclosed, a press release noted that the company generated estimated revenues of $200 million in 2004. 

The buyout represented Harvest Partners’ second consumer products deal of 2004 following the July acquisition of Evenflo Company, a baby care and juvenile products manufacturer.