CHB Capital Partners

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Spring 2008

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Winter 2003

It's been almost a year since our last newsletter, and what a year it was. Good-bye 2002, here's to 2003!

In October we invested $5 million alongside management to form Schott High-Reliability LLC in a spin-off transaction from its parent company. Headquartered in Wayzata, MN, Schott High-Reliability manufactures magnetic components, antenna coils and power supplies for the military electronics, implantable medical device and commercial avionics markets. The Company has strong relationships with key players in its end use markets including Lockheed Martin, Guidant and Honeywell. We are working closely with management on several growth initiatives including reviewing potential acquisitions.

With an American (Bode Miller); on top of the current World Cup standings for the first time in about 20 years, it only seems fair that Spyder would continue to out-perform its competition. Sales have increased nearly 25% and profits will achieve record levels in Spyder's fiscal 2003. Now, we're not sure how much Spyder's racing suits have to do with Bode's success but we are sure that the exposure - especially in Europe, helps bolster Spyder's position as the technical, performance leader in the ski apparel market.

In October, Champion Technologies was sold to M-Tron (a division of publicly traded Lynch Corporation). Given the extremely difficult telecommunications environment, we all feel fortunate to have completed a deal that preserved some operating continuity in a business that we worked so hard to build.

Alternative Technology had record sales and EBITDA in 2002 despite the continued slowdown in IT spending that has resulted in a decline of 20% to 30% in competitors' revenues over the last two years. Growing at all in a down market is very tough, growing fast in an up market is a lot more fun - will someone please let us know when IT spending is going to grow again?

With the Schott investment, we have reached the point where we need to raise a new fund. We hope to be in the market sometime in April and would welcome any thoughts or recommendations you may have on this topic. There will be more on our fund raising effort in the next newsletter.

Please 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, Kyle McNeal & Allison Kissling

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