KCAEP, LLC a holding company formed by KCA Partners, consists of three operating subsidiaries: Apex Medical Corporation, a manufacturer of low-tech, self-care medical products; KCA Foods, a majority owner of Van’s International Foods, a manufacturer of gourmet frozen waffles; and KCA Engineered Plastics, the sole owner of US Thermoplastics, a manufacturer of molded plastic parts.
Originally, KCA Partners owned and financed each company on a standalone basis, without a holding company structure. The incumbent lender decided to exit this segment of the cash flow lending market and wished to be refinanced out of its positions. However, KCA Partners was having difficulty finding a new financial partner who would provide financing to each of the three companies.
Caltius Mezzanine determined that the whole was greater than the sum of its parts. By combining the cash flows of the three operating entities, a higher amount of leverage could be supported. Caltius Mezzanine worked with KCA Partners to create a holding company structure that contained all three of the operating entities.
Caltius Mezzanine made a loan to the new holding company that was supported by intercompany notes between each of the three operating entities and the holding company. As a result, KCA Partners successfully refinanced its existing lender and had a more flexible financial structure to support its plans for growth and acquisitions.
“We envisioned a unique capital structure that Caltius Mezzanine grasped, and then they worked quickly to provide that financing on the terms we initially discussed. Caltius showed an ability to think outside of the proverbial “box” and was extremely easy to work with.”
PJ Nora, Partner, KCA Partners