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It has been almost nine months since our last letter and we
have been busy. Unfortunately, to adhere to the strict one
page limit will necessitate eliminating the breezy intro and
providing only highlights on selected activities. Hopefully
this is not a permanent change. We hired Sean McClenaghan
as an associate in February. Previously he worked with McKinsey
& Co. in Atlanta and with DuPont for seven years before business
school at Harvard.
In October of last year, at a simultaneous closing, Trussway
acquired a $40 million in revenue single family truss manufacturer
and we sold our investment in Trussway to a larger private
equity fund. We and management believe that Trussway has found
a great partner with the resources to help it lead the consolidation
of the factory-built housing component industry. This was
our first realization from the Fund and it worked out very
well for everyone.
We exercised our option to invest additional equity into Spyder
at the end of 1998. Our early analysis of Spyder's performance
during last season's miserable ski season (not even enough
snow for John to take his annual trip down the slopes in the
ski patrol toboggan) shows that the company gained significant
market share and had the best combined levels of sell through
and gross margin for its specialty ski store customers. Our
pre-season orders were strong for the 99/00 season and we
look forward to more excitement from Spyder during this next
winter.
We will close a new investment in early June. We are backing
the management team of an environmental services company to
buy out an ESOP that is the controlling shareholder. The company
specializes in providing project management services to government
and commercial clients in complex clean-up situations. Simultaneous
with our investment, the Company will acquire a similar sized
competitor. We are partnering with Cherokee Investment Security
in this investment. They are a Denver-based private equity
fund that focuses on investments in the environmental sector.
In addition we have signed a letter of intent to provide growth
equity to a small ticket leasing company. The company has
a very successful model for growing originations and requires
capital both to accelerate its roll-out and to provide access
to lower cost funding. We are partnering with Provender Capital
in this investment. They are a New York based private equity
fund that focuses on, among other things, financial services
investments.
We have closed CHB Capital Partners II at $48 million. We
encourage you to call us with interesting investment opportunities
within the closely-held and family owned business market.
We look for transactions where we can invest equity capital
in established companies with $20 million or more in revenue.
Should you call, we guarantee you a thoughtful and timely
response.
Tad Kelly, John Flanigan, Blake Morris, Grant Clayton & Sean
McClenaghan
511
Sixteenth Street, Suite 600 Denver, CO 80202
Telephone: (303) 571-0100 Facsimile: (303) 571-0114
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