Invests $36.9
Million in Nello Industries Investco, LLC
Generates $10.4
Million Realized Gain From the Partial Exit of
Investments in a Lower Middle Market Portfolio Company
HOUSTON, June 11,
2024 /PRNewswire/ -- Main Street Capital Corporation
(NYSE: MAIN) ("Main Street") is pleased to announce that it
recently completed a new portfolio investment totaling $36.9 million to facilitate the management led
buyout of Nello Industries, LLC ("Nello" or the "Company"), a
manufacturer of engineered poles and towers for electric utility,
telecommunications and other related wireless and electric
transmission infrastructure applications. Main Street, along with
its co-investor, partnered with the Company's founding management
team to facilitate the management led buyout, with Main Street's
investment including a combination of first lien, senior secured
term debt and a direct equity investment. In addition, Main Street
and its co-investor provided the Company with a revolving line of
credit, a portion of which was funded on the closing date, to
support the Company's future growth initiatives and working capital
needs and expects to provide additional growth capital in the
future to help facilitate the Company's growth strategy.
Founded in 2002 and headquartered in South Bend, Indiana, Nello is a manufacturer
of engineered steel poles and structures for the electric utility
and wireless telecommunications end markets, with the Company's
products including tapered steel poles, transmission poles,
substation frames, lattice towers and guyed towers. The Company's
customer base consists of top engineering, procurement and
construction ("EPC") companies and leading electric utility and
telecommunications companies.
Main Street is also pleased to announce that it recently exited
its debt investments and partially exited its equity investments in
a Lower Middle Market portfolio company (the "Existing Company")
upon the combination of the Existing Company with a strategic
acquirer through the sale of the Existing Company's operating
assets. The Existing Company is a leading designer, manufacturer
and distributor of decorative planters, fountains and related home
décor items through partnerships with growers, garden shops and
traditional and online retailers.
Main Street, along with its co-investor, made its initial
investment in the Existing Company in March
2020, with Main Street's investment consisting of a
$26.0 million first lien, senior
secured debt investment, a $5.0
million first lien, senior secured revolving credit
commitment and a direct equity investment of $5.8 million. After Main Street's investment, the
Existing Company experienced significant growth of both its base
business and its wholly owned subsidiary, which is an innovative
design and supply chain solutions provider for the fragrance
packaging industry.
In May 2023, the Existing Company
successfully sold this subsidiary to a strategic acquirer for
upfront cash and future contingent consideration. The Existing
Company continues to own the right to future contingent
consideration payments from the sale of the subsidiary that are
payable based on the achievement of certain future performance
measures. Main Street's current remaining portion of the contingent
consideration, through its equity ownership in the Existing
Company, represents a maximum realizable value of $4.1 million, to which Main Street has attributed
a fair value of $2.4 million as of
March 31, 2024.
The sale of the subsidiary allowed the Existing Company to
continue its focus on product innovation, supply chain management
and exceptional customer service in its base business, allowing the
Existing Company to capture significant additional market share
with new and existing customers. This significant growth culminated
with the recent combination of the Existing Company with the
strategic acquirer.
Main Street realized a gain of $10.4
million on the recent sale of the Existing Company's
operating assets, including a minority equity ownership position in
the acquirer of the Existing Company's operating assets that Main
Street received as part of the sale proceeds. Main Street has also
received total dividends of $10.1
million over the life of its equity investment in the
Existing Company. As a result, on a cumulative basis since Main
Street's initial investment in the Existing Company in March 2020 and taking the realized gain and
dividends into consideration, Main Street has realized an annual
internal rate of return ("IRR") of 53.2% and a 4.6 times money
invested ("TMI") return on its equity investment in the Existing
Company. On a cumulative basis including both Main Street's debt
and equity investments in the Existing Company, Main Street has
realized an IRR of 22.1% and a 1.7 TMI return.
ABOUT MAIN STREET CAPITAL CORPORATION
Main
Street (www.mainstcapital.com) is a principal
investment firm that primarily provides long-term debt and equity
capital to lower middle market companies and debt capital to middle
market companies. Main Street's portfolio investments are typically
made to support management buyouts,
recapitalizations, growth financings,
refinancings and acquisitions of companies that operate in
diverse industry sectors. Main Street seeks to partner with
entrepreneurs, business owners and management teams and generally
provides "one-stop" financing alternatives within its lower middle
market investment strategy. Main Street's lower middle market
portfolio companies generally have annual revenues between
$10 million and $150 million. Main Street's middle market
portfolio companies are generally larger in size than its lower
middle market portfolio companies.
Main Street, through its wholly owned portfolio company MSC
Adviser I, LLC ("MSC Adviser"), also maintains an asset management
business through which it manages investments for external parties.
MSC Adviser is registered as an investment adviser under the
Investment Advisers Act of 1940, as amended.
Contacts:
Main Street Capital Corporation
Dwayne L. Hyzak, CEO,
dhyzak@mainstcapital.com
Jesse E. Morris, CFO & COO,
jmorris@mainstcapital.com
713-350-6000
Dennard Lascar Investor
Relations
Ken Dennard |
ken@dennardlascar.com
Zach Vaughan |
zvaughan@dennardlascar.com
713-529-6600
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SOURCE Main Street Capital Corporation