Press Coverage: Great Western Transaction

First Investment Is A Box Office Hit for Yankee Hill
Dow Jones LBO Wire Story
By Beina Xu

1/6/2009 Hollywood, Ala. - Yankee Hill Management LLC hasn't made an investment in the two years since its launch. But the firm broke its silence in this first week of the new year, acquiring a majority stake in Great Western Products Co., a manufacturer of movie theater food. The deal price wasn't disclosed, but the firm is taking a 77% stake in the company, prior to exercise of warrants by its mezzanine lender, according to Partner Peter Weinbach. Management, led by President Ralph Ferber, is also investing.

PNC Financial Services Group Inc. provided the senior debt and South Franklin Street Partners was the mezzanine lender for the deal, which had about a 2-1 debt-equity ratio, said Lawrence Weinbach, who is Peter Weinbach's father and also a partner at the firm. The deal was funded by a handful of private investors, he added.

The Hollywood, Ala.-based company makes food, paper and cleaning products for the movie-theater industry, which comprises 90% of its business, according to Lawrence Weinbach. It manufactures foods like popcorn, cotton-candy sugar, snow-cone ingredients and nachos from its three facilities in Alabama, Illinois and North Carolina. The company, which has about 100 employees, posted around $50 million in revenue last year, and expects to do $70 million in 2009, according to Lawrence Weinbach, who added that the firm would grow the company organically with the option of add-ons in the future.

“We look for something that has a competitive edge, recurring revenues and substantial cash flow - and this company fit the bill, available at an attractive buy-in price,” said Peter Weinbach. Lawrence Weinbach added that although nothing is recession-resistant, the movie industry has traditionally done well during economic downturns.

Yankee Hill was contacted by another lender - not involved in the deal – who thought the firm might be interested in the company.

The firm, managed by the two Weinbachs, launched a couple years ago when father and son decided to put their investment and operational experience to use. Lawrence was the former chief executive of Unisys Corp. and Anderson Worldwide, and son Peter had come from 15 years of private equity experience including Apax Partners, where he was vice president, and AIG Horizon Partners, where he was managing director.

Southport, Conn.-based Yankee Hill looks for companies with sales of $50 million to $250 million, said Peter Weinbach. The firm invests with capital from high-net-worth individuals, but will consider broadening its limited partner base to institutional investors in the future, he added.

As for its investment drought over the past couple of years, it was all about pricing.

“Things were priced too high,” said Lawrence Weinbach. “Seller's expectations were still not in the realm of what we thought was appropriate. To use an old phrase, we kept our powder dry - so we just waited. We said, ‘If we can't do the deal, we don't want to do something foolish.’ “