CHB Capital Partners

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Winter 2001

No hockey trash talk this Winter, the Av's are playing well but we don't want to jinx them like in past years. We've scheduled our CHB Ski Day for March 17th and, this time, several of our portfolio company CEO's, including David Jacobs from Spyder, are coming. All of us, except Tad, will be rooting for David during the NASTAR racing portion of the day.

At the end of December we made a $9.0 million investment in Alternative Technology, Inc. For 2000, the company had revenues of just under $100 million. ATI distributes software and equipment and provides training services to value-added resellers in four key market segments; server-based computing, wireless broadband, internet security and internet quality of service. Their suppliers include, Citrix, Wyse, Breezecom, Proxim, Radguard, Packeteer and Sitara. The company has grown rapidly over the last ten years and sought outside capital to support further growth and to provide its founders with liquidity for a small portion of their investment. Demand for computing and telecom products has certainly softened but ATI still expects to be up significantly in 2001 based on a mix of products and services that are focused on lowering the total ownership cost of computing and improving the productivity and security of existing bandwidth.

MACTEC has successfully completed its integration of Harding Lawson Associates and is now focused on key opportunities in the market for commercial nuclear power plant decommissioning and demolition ("D&D"). Over half of the licenses for nuclear power plants in the United States are set to expire over the next 20 years creating a large and growing market for D&D services. Each plant requires between $300 - $500 million in work to dispose of properly, which will lead to a market for D&D services of over $1 billion per year by 2004. MACTEC has provided services to 48 of the commercial nuclear power sites and nearly all of the major DOE installations in the United States. The company has a very strong position in the race to address the needs of this developing market.

Spyder continues to enjoy great success in the ski apparel market. Sales will be up 35% over last year and the brand is creating great buzz with retailers. We want to thank all of you who joined in the snow dancing this winter -- it worked! Spyder's retailers are seeing strong sell through and with the 2002 Olympics coming up in Salt Lake City, management is looking forward to another strong year.

Champion Technologies, Inc. will finish its fiscal year ending March, 2001 up about 35% over last year. The slowdown in the telecom infrastructure build out that began in the Fall has provided the company with some breathing space to address manufacturing capacity and outsourcing opportunities. Although, as you would expect, we hope the slowdown doesn't give the company too much breathing space.

On the new deal front we have several proposals under consideration by management teams but nothing under letter of intent at this time. We revised our web site in the Fall and invite you to take a look at the new format. As always, please call us to discuss 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, Steve Greene & Nancy Thayer

511 Sixteenth Street, Suite 600 Denver, CO 80202
Telephone: (303) 571-0100 Facsimile: (303) 571-0114