Services & Experience
For more than 44 years, the principals of Cappello Global, LLC and its affiliates have been providing innovative investment banking services, encompassing a broad range of transactions, to public and private companies in more than 50 countries around the globe. Cappello operates with a core philosophy of guiding our clients to sustainable, long-term strategic and financing solutions, rather than focusing on a deal-by-deal basis. Our approach resonates with our clients, builds trust and is evident in our client testimonials.
Cappello offers decades of investment banking experience, with a focus on the following:
Mergers & Acquisitions
Cappello professionals have decades of experience in advising business owners on initiating and executing successful M&A transactions.
Sell-Side M&A
The sale of a business is a complex process that requires significant preparation, deep and current strategic and financing market knowledge, broad strategic and financial buyer relationships, specialized negotiating skills and a dedicated investment banking team with extensive execution experience.
Cappello professionals have successfully advised on the sale of public and private companies ranging in value from tens of millions to billions of dollars. Our senior team focus, in-depth due diligence and disciplined transaction process have earned us a reputation for certainty of closing and exceeding our client’s expectations on valuation and terms.
Buy-Side M&A
Many businesses employ acquisition strategies to enhance growth, vertically integrate, eliminate competitors, expand geographically, or acquire new products, services or technology. Acquiring a business is a significant undertaking that requires careful research, mindful relationship building, refined negotiating strategies, rigorous target due diligence, detailed integration planning, and a dedicated investment banking team with extensive execution experience.
Cappello professionals have successfully advised public and private companies on acquisition transactions with an aggregate value in the billions. Our seasoned team of bankers serve a role similar to that provided by the internal M&A departments of large corporations; we dig deeper than most investment banks in our due diligence, seeking to uncover risks that could impact the target or our client’s business. Our team runs a disciplined and efficient transaction process that is designed to identify, evaluate and qualify relevant targets prior to conducting comprehensive due diligence, negotiating terms and proceeding to a closing.
Selected Cappello M&A case studies:
Smart Start, Inc.
Client:
- Founded in 1992, Smart Start, Inc. (Smart Start or the Company) is a global leader in the ignition interlock device industry providing a broad range of offender monitoring products and services to consumer, commercial, judicial and law enforcement end markets
- Smart Starts state-of-the-art alcohol monitoring products feature custom hardware and proprietary software and are offered through a recurring revenue, full-service lease model, which includes installation, calibration, customer support, monitoring authority reporting and administrative support services
- The Company is headquartered in Grapevine, Texas and has the largest global IID service center footprint, with an extensive distribution network of over 1,500 U.S. and international sites
Situation:
- Smart Start had grown revenue organically for 22 consecutive years, generating consistent profitability from the recurring revenue generated by its fleet of monitoring devices
- The Companys long-standing shareholder base sought to monetize the majority of their investment, while retaining a small minority interest, with an institutional partner with experience in the offender monitoring industry and the ability to augment Smart Starts long-term growth plan by providing capital and expertise for potential acquisitions
Solution:
- Cappello Global, LLC (Cappello) conducted and facilitated extraordinary operational, financial, technological, industry, legislative and other key due diligence in order to educate buyers on this unique, cycle agnostic and recurring revenue growth business
- To facilitate the diligence of prospective investors, Cappello led the development of a detailed and fully integrated financial model, extensive information memorandum and comprehensive virtual data room
- Cappello worked closely with the Company to develop and execute on a highly targeted transaction process, identifying and approaching only highly qualified, growth-oriented investors with relevant offender monitoring industry experience
- The Cappello team assisted the Company in evaluating and negotiating proposed investment terms from multiple investors and, ultimately, in the closing of a transaction with ABRY Partners, a leading private equity fund with over $42 billion invested to date
- The transaction was closed and funded within five months of the launch of the process
- Cappello served as exclusive financial advisor to Smart Start, Inc.
MMGY Global, LLC
Client:
- Founded in 1981, MMGY Global, LLC (MMGY or the Company) is the largest independent and fully integrated marketing services provider exclusively focused on the travel and hospitality industry, including the entertainment and leisure sub-sectors
- MMGY provides a fully integrated suite of services, including: brand advertising, interactive services, public relations, social media, CRM/analytics and specialized research using the industrys most expansive and richest historical data
- Over its 35 year history, the Company has built a premiere brand and loyal client base, which includes many Fortune 500 companies, such as American Express Travel, Lufthansa, Marriott, Starwood Hotels & Resorts and Wyndham Worldwide, as well as top U.S. and international tourism destinations
Situation:
- MMGY was a highly profitable and growing business, but the Company lacked the capital and expertise required to accelerate growth and expand through acquisitions
- The Companys founders and shareholders sought to monetize the majority of their investment, while still retaining a meaningful minority interest, with an institutional partner that had experience in the travel and hospitality industry as well as the ability to augment MMGYs long-term growth plan by providing capital and expertise for potential acquisitions
Solution:
- Cappello Global, LLC (Cappello) conducted and facilitated extensive operational, financial, technological, industry and other upfront due diligence in order to prepare the Company for market and to educate investors
- In order to facilitate the search for prospective investors, Cappello worked closely with the Company in the development of a detailed and fully integrated financial model, confidential information memorandum, management presentation and a comprehensive virtual data room
- Cappello developed and executed on a highly targeted and carefully managed transaction process, identifying and approaching only highly qualified, growth-oriented investors with relevant travel and hospitality industry experience
- The Cappello team assisted in evaluating and negotiating proposed investment terms from multiple investors and, ultimately, in the closing of the transaction with Peninsula Capital Partners, a private equity fund with over $1.2 billion invested to date and Jeffrey Fine, an independent sponsor and former CEO of CIBT, Inc. the worlds largest expeditor of travel visas
- Cappello served as exclusive financial advisor to MMGY Global, LLC
Prologic Technology Systems, Inc.
Client:
- Prologic Technology Systems, Inc. (“Prologic" or the "Company") is a developer and provider of industry-leading human capital management (“HCM”) SaaS solutions to K-12 education agencies in Florida, Texas and New York
- The Company’s TEAMS (“TEAMS”) platform enables more efficient and cost-effective management of administrative functions, encompassing finance, human resources and payroll, and student information systems at local education agencies that seek to maximize administrative productivity and allocate more resources toward the education of students
- Prologic was founded in 1998 and is based in Austin, Texas
Situation:
- Prologic had developed a leading K-12 HCM solution, which was evidenced by a growing business with high margins and strong client retention, and the Company had been approached repeatedly by strategic and financial investors
- The Company’s founders and shareholders sought to monetize their investment in the Company and partner with a strategic investor with an existing K-12 software sales organization capable of deploying the TEAMS solution across the country
- The majority shareholder sought to make an operational exit from the business, while retaining the ability to remain invested through a minority stake in the business
Solution:
- Prologic engaged Cappello Global, LLC (“Cappello”) to advise on a comprehensive sell-side transaction process, to include identifying and contacting potential strategic and financial investors, developing a detailed and fully integrated financial model, drafting an extensive information memorandum and populating a comprehensive virtual data room
- Prior to launching a broader auction process, Cappello facilitated pre-emptive discussions between Prologic and Frontline Technology Holdings, LLC, a portfolio company of Thoma
Bravo, LLC (“Frontline”) - On behalf of the Company, the Cappello team negotiated a compelling pre-emptive bid with Frontline, and then supported the Company through detailed due diligence, additional negotiations and closing documentation
- With Cappello’s guidance and support, the Company was able to close a transaction that accomplished the founders’ and shareholders’ goals of realizing compelling terms, partnering with an industry leader, and co-investing with the new partner for potential future upside
- Prologic successfully closed this highly strategic transaction in less than four months, from initiation through closing and funding
- Cappello served as exclusive strategic and financial advisor to Prologic
Equity Financing
Many businesses seek institutional equity financing to generate liquidity, execute on growth opportunities, fund acquisitions or facilitate the buyout of a family member, business partner or shareholder. Institutional equity capital may take the form of common stock, membership units, preferred equity or other hybrid equity securities – each with a range of potential terms and considerations.
Closing an institutional equity financing with the right partner under optimal terms and valuation is a complex process that requires significant preparation, deep and current market knowledge, extensive institutional equity relationships, and a dedicated and seasoned investment banking team with relevant transaction execution and negotiating skills.
Cappello professionals have successfully advised public and private companies on equity financing transactions ranging from tens of millions to hundreds of millions of dollars. Our senior team focus, comprehensive due diligence and disciplined transaction process have earned us a reputation for certainty of closing, and exceeding our client’s expectations on valuation and terms.
Selected Cappello Equity Financing case studies:
Unefon, S.A. de C.V.
Client:
- Unefon, S.A. de C.V. (Unefon or the Company) is a Mexican wireless loop cellular telephony operator focused on the mass market, with the capacity to deliver a wide variety of telecommunication services
- The Company has long term contracts for advertising with TV Azteca, the second largest television broadcaster in Mexico, and for distribution with Grupo Elektra, Latin America's largest specialty retailer
- Unefon is one of Mexico's largest holders of wireless radio spectrum, with nationwide licenses at the 1.9 GHz PCS cellular frequency and additional licenses at the 3.4 and 7 GHz frequencies
Situation:
- The Company was a start-up conceived by Ricardo Salinas, a prominent Mexican businessman and Chairman of Grupo Elektra and TV Azteca
- Approximately $1 billion in capital was required to pay for the winning bid of frequency licenses from the Mexican government and to purchase the telecommunications equipment required to launch the business
- Mr. Salinas desired a specialized equity structure that would be largely performance based and minimally dilutive to Unefons founding shareholders in an upside scenario
Solution:
- After an unsatisfactory effort by a bulge bracket investment bank, Mr. Salinas hired Cappello Global, LLC (Cappello) to secure the equity component of the deal
- Drawing upon its extensive network of private equity relationships, Cappello was able to quickly gain the interest of a handful of large private equity funds
- Cappello worked closely with the Companys management team to develop and model a customized equity structure, a series of warrants, which allowed attractive returns for investors but retained majority interest for Unefons founding shareholders
- Cappello worked closely with the selected funds through the due diligence process, negotiation of terms and completion of the final legal agreements
- The result was a $250.0 million equity commitment, conditional only upon the Companys receipt of vendor financing for the required telecommunications equipment
- Cappello served as exclusive financial advisor to Unefon, S.A. de C.V.
SunStreet Energy Group, LLC
Hanmi Financial Corp. (NASDAQ: HAFC)
Client:
- Hanmi Financial Corp. (NASDAQ:HAFC) (Hanmi or the Company) operates 27 full-service branch offices in California with total assets of $2.9 billion
- First and most reputable Korean American bank in the U.S.
Situation:
- Hanmi received a Final Order from the California Department of Financial Institutions and entered into a Written Agreement with the Federal Reserve Bank of San Francisco to raise at least $100 million in a short time frame
- Prior to the engagement of Cappello Global, LLC (Cappello), Hanmi had hired another advisor to raise capital, but with limited success
Solution:
- Cappello developed a comprehensive transaction strategy, conducted in-depth financial and operational due diligence, contacted a large number of domestic and international institutions and high net worth individuals, performed financial valuation services and provided a fairness opinion
- Cappello advised on a $120.0 million in common stock offering, comprised of $47.0 million from a rights offering and $73.0 million from a registered direct best efforts public offering
- This deal was priced at $1.20 per share, the same price as the $240 million Woori Finance Holdings Co. (Woori) transaction, to give existing Hanmi shareholders and community investors an opportunity to participate on the same pricing terms
- The acquisition price per share represents a 10% discount to Hanmi's two-week average stock price after the regulatory order announcement and equals the unaffected price, which is the trading day prior to a press report regarding the potential transaction with Woori
- The transaction marked one of the few capital raises achieved for a bank operating under a regulatory consent order
- Prior to the consummation of the transaction, more than 270 banks had failed
- A significant amount of the $120.0 million raised came from individual community investors who stepped up to support the bank
- Access to community investors, a key goal for Hanmi, was facilitated by the design of the offering
- Cappello served as exclusive financial advisor and placement agent to Hanmi Financial Corp.
Debt Financing
Most businesses will require debt financing at some point to fund working capital requirements, execute on growth opportunities, fund acquisitions, refinance existing facilities, finance a dividend recapitalization or facilitate the buyout of a family member, business partner or shareholder. Institutional debt capital may take the form of senior, subordinated, mezzanine, uni-tranche or other hybrid securities – each with a range of potential terms, pricing and structural considerations.
Completing a debt financing with the right lender and at optimal terms and pricing requires significant preparation, deep and current market knowledge, extensive bank and non-bank lender relationships, and a dedicated and seasoned investment banking team with relevant transaction execution and negotiating skills.
Cappello professionals have successfully advised public and private companies on debt financings with an aggregate value in the billions, with individual transactions ranging from tens of millions to billions of dollars. Our senior team focus, comprehensive due diligence and disciplined transaction process have earned us a reputation for certainty of closing, and exceeding our client’s expectations as to leverage, pricing and terms.
Selected Cappello Debt Financing case studies:
All American Oil and Gas Inc.
Client:
- All American Oil & Gas, Inc. (AAOG or the Company) is a San Antonio, Texas-based independent upstream oil and gas operator, founded in 2003 to acquire underdeveloped assets
- Kern River Holdings Inc. (KRH), AAOGs principal operating subsidiary, is the largest private oil and gas producer in the Kern River Field and has grown production to more than 2,000 barrels of oil a day through its low-cost enhanced oil recovery steam flood program
Situation:
- Following the consummation of a $200.0 million Reserve Based Loan (RBL) financing with GE Energy Financial Services (NYSE:GE) and Fortress Investment Group (NYSE:FIG), (collectively, Senior Lender) that Cappello executed on for the Company, Cappello Global, LLC and Niagara International Capital Limited (collectively, Cappello) continued to provide advice to the Company through a challenging commodity environment
- With oil prices declining precipitously leading up to and post financing, the Company focused its efforts on optimizing production growth and cutting costs
- Mitigating rapidly declining oil prices, KRHs long-term hedges on the majority of its production became increasingly profitable and provided extraordinary downside protection
- These hedges both helped support the financial health of the Company and made it relatively attractive to potential investors vs. its comp set
- Notwithstanding the Companys long-term hedges, the Senior Lender noticed KRH of a borrowing base deficiency on its RBL facility
Solution:
- Facing a potential default in a declining price environment, Cappello executed a highly targeted marketing process to deliver capital solution options that would both potentially repay the Senior Lender and reduce borrowing base redetermination risk going forward a risk mitigant required by the second lien market
- Cappello assisted the Companys board of directors and management in evaluating all alternatives in order to preserve equity value, reduce future redetermination risk and provide transparency in the Companys capital structure, so it could operate successfully in an unfavorable market
- Approximately three months from launching the refinancing process, the Company closed on a $50.0 million 2nd lien credit facility provided by AB Private Credit Investors that substantially mitigated borrowing base redetermination risk and positioned the Company for future organic and inorganic growth supported by a long-term value-added partner all at an all-in blended cost of capital comparable to the original Senior Lender RBL
- Cappello served as exclusive financial advisor to All American Oil & Gas, Inc. on this transaction representing the third successful closing for our client in approximately 18 months
Bravo Fit, LLC
Client:
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Founded in 2011, Bravo Fit, LLC (“Bravo Fit” or “Company”) is a well established, rapidly growing and highly profitable franchisee of industry leading U.S. fitness club franchisor, Planet Fitness, Inc. (“PF”)
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Bravo Fit’s high value, low price (“HVLP”) membership-based business model generates predictable and recurring revenues as part of a PF franchise platform that propels scalability through national advertising initiatives and strong brand awareness
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The Company is headquartered in Oregon, and is a top performing PF franchisee that has been awarded multiple Area Development Agreements (“ADAs”) in high growth markets in Oregon and Alaska
Situation:
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In order to fulfill its ADA growth obligations to PF, calling for Bravo Fit to expand its number of locations over four-fold in the course of just a few years, the Company required significant growth capital
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The Company needed to fund tens of millions in club development costs, which was far beyond what could be achieved with traditional bank debt financing, and specifically called for junior growth capital
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The Company’s financing goals included: (i.) access to sufficient capital to meet its ADA build-out obligations, and beyond; (ii.) no equity dilution; (iii.) efficient cost of capital; (iv.) minimal amortization to maximize free cash flow, and; (v.) a strategic partnership with an institutional capital provider familiar with the Planet Fitness platform
Solution:
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Cappello Global, LLC (“Cappello”) conducted extensive upfront due diligence, assisted in the consolidation of store-level historical financials, built a fully integrated financial model, prepared a detailed information memorandum and identified the relevant universe of investors
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Cappello worked closely with Bravo Fit’s key executives and managed a robust and highly competitive process, producing multiple capital alternatives ranging from senior debt to equity
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Cappello advised the Company in securing, evaluating and negotiating proposed investment terms from several institutional investors and through the completion of closing documentation
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Bravo Fit closed on a $40 million unitranche debt facility with ArrowMark Partners (“ArrowMark”), a $16 billion investment fund based in Denver, CO that had previously invested in two other successful Planet Fitness franchises
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The transaction was closed and funded within two months of the initial dialogue with ArrowMark, and met or exceeded the Company’s ambitious transaction goals
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Cappello served as exclusive financial advisor to Bravo Fit, LLC
Smart Start, Inc.
Client:
- Founded in 1992, Smart Start, Inc. (Smart Start or the Company) is a global leader in the ignition interlock device industry providing a broad range of offender monitoring products and services to consumer, commercial, judicial and law enforcement end markets
- Smart Starts state-of-the-art alcohol monitoring products feature custom hardware and proprietary software and are offered through a recurring revenue, full-service lease model, which includes installation, calibration, customer support, monitoring authority reporting and administrative support services
- The Company is headquartered in Grapevine, Texas and has the largest global IID service center footprint, with an extensive distribution network of over 1,500 U.S. and international sites
Situation:
- Smart Start sought to take advantage of its strong financial position and attractive credit market conditions to complete a debt recapitalization before year-end
- In addition to providing tax-driven liquidity to shareholders in the form of a one-time special distribution, the Company desired a new facility to provide capital to buy back stock to enhance funding for continued rapid growth and the launch of new products and services
Solution:
- Cappello Global, LLC (Cappello) conducted extensive due diligence and managed a comprehensive data room which allowed for an efficient and expedited process
- To rapidly educate potential lenders on the business, Cappello led the development of a fully integrated financial model and a detailed information memorandum
- Cappello worked closely with Smart Start to execute a highly targeted marketing strategy, identifying and approaching a handful of qualified financial institutions that could fully underwrite the senior facility
- Cappello assisted the Company in evaluating and negotiating proposed investment terms from multiple lenders and, ultimately, in the completion of closing documentation
- Smart Start successfully closed a transaction with Wells Fargo Bank, N.A. (Wells Fargo), the sole underwriter and funder of a senior credit facility, consisting of a term loan and a revolver
- The transaction was closed and funded within two months of the initial dialogue with Wells Fargo and prior to year-end, achieving the desired timeline
- Cappello served as exclusive financial advisor to Smart Start, Inc.
Specialized and Project Financing
For decades, Cappello has been recognized as an innovator in the capital markets, employing creative strategies and innovative financing structures to achieve our client’s specialized and project financing goals.
Specialized Financing
Certain businesses and situations require specialized financing structures and securities. Specialized financing may be needed to: fund growth; unlock asset value; develop projects or assets; or, refinance existing facilities. Specialized financing structures may take the form of equity or debt, or both, and may include:
- Private investments in public companies
- EB-5 capital
- SBA, DoD, DoE or other government-sponsored programs
- Derivative financing instruments
- Tax-related financing
- Off balance-sheet financing
Completing a specialized financing transaction with the right financing partners and an appropriate structure and terms is a complex process that requires significant preparation, deep and current knowledge of the financing markets, extensive institutional equity and debt relationships, and a dedicated investment banking team with relevant execution experience.
Cappello professionals have successfully initiated, structured and closed billions of dollars in specialized financings, in transactions ranging from tens of millions to hundreds of millions of dollars. Our senior team focus, technical experience, comprehensive due diligence, and disciplined transaction process have earned us a reputation for certainty of closing and exceeding our client’s expectations on terms and cost of capital.
Project Financing
Many businesses and government institutions require project financing to grow and fulfill their mandates. Project financing may be needed to: build a new plant, refinery or other commercial facility; develop traditional or alternative energy assets; or, complete a major infrastructure project. Project financing capital structures often include both equity and debt and can include a wide range of securities, tax-related financing, or government funding or guarantee programs – each with a range of potential terms and structural considerations.
Completing a cohesive and successful project financing with the right financing partners and an appropriate structure and terms is a complex process that requires significant preparation, deep and current knowledge of the financing markets, securities structuring experience, extensive institutional equity and debt relationships, and a dedicated investment banking team with relevant execution experience.
Cappello professionals have successfully advised on billions of dollars in aggregate project financings, in transactions ranging from tens of millions to hundreds of millions of dollars. Our senior team focus, comprehensive due diligence, and disciplined transaction process have earned us a reputation for certainty of closing and exceeding our client’s expectations on terms and cost of capital.
Selected Cappello Specialized and Project Financing case studies:
Midwest AgEnergy, LLC
Client:
- Midwest AgEnergy Group, LLC (MAG or the Company), a subsidiary of Minnesota based wholesale electric utility cooperative, Great River Energy (GRE), develops and operates energy efficient biorefineries fueled by waste steam from combined heat and power (CHP) vs. traditional fossil fueled plants
- The Companys first CHP biorefinery commenced operations in 2007. Blue Flint Ethanol (BFE) is a 65 million gallon per year (MGY) facility located near Underwood, North Dakota, and is co-located with GREs Coal Creek Station power plant
Situation:
- Based on the success of the Companys BFE biorefinery, GRE began to develop plans for a comparable ethanol biorefinery to be co-located with one of GREs other North Dakota generation plants, Spiritwood Station, near Jamestown, North Dakota
- Over several years, GRE designed and prepared to construct DSA, and established Midwest AgEnergy Group as the parent company for BFE, DSA and other potential future biorefinery assets
- To facilitate its growth plan, MAG sought $155.0 million in combined debt and equity capital to construct the DSA complex, including the CHP infrastructure and a grain storage facility, at Spiritwood Energy Park
- The challenge was that no conventional ethanol plant had been approved by the EPA under the Renewable Fuel Standard (RFS2), and none had been constructed since 2007
- After trying for several months, the Company was unable to secure adequate capital for the DSA project, despite having obtained EPAs certification that fuel produced by DSA would qualify as renewable under RFS2, making it the first conventional ethanol biorefinery ever to so qualify
Solution:
- Cappello Global, LLC (Cappello) advised MAG on its $155.0 million project financing for the development of a new 65 MGY CHP biorefinery, Dakota Spirit AgEnergy (DSA), located in Spiritwood, North Dakota, and the simultaneous equity recapitalization of BFE
- Cappello leveraged its industry and financial experience in structuring the financing, developing the requisite financial models and marketing materials, and managing a comprehensive data room, thereby facilitating an efficient process for a broad range of debt and equity investors
- Cappello advised, modeled, negotiated and structured a complex multi-tiered entity project financing, which included project company debt and an equity recapitalization of an existing business, BFE
- Cappello optimized DSAs financial structure through the placement of EB-5 capital as low-cost junior project debt, enhancing equity returns without overly burdening the enterprise with cash flow restraints and restrictive covenants
- Specifically, Cappello sourced and structured extraordinarily cost-effective subordinated project debt utilizing the EB-5 program through a US government approved Regional Center syndicating high-net worth investors immigrating to the US from China and a number of other countries
- Cappello delivered a uniquely successful long-term financing solution in a complex situation that met the Companys needs and exceeded stakeholder expectations
- Cappello served as exclusive financial advisor to Midwest AgEnergy Group, LLC
Western Energy Corp.
Client:
- Western Energy Corp. (Western Energy or the Company) is a privately held corporation controlled by Alexander L. Cappello, in partnership with Chase Manhattan Bank, a major money center bank
- The Company holds energy investments in power plants, steam fields and a variety of energy related assets
Situation:
- Deregulation of the energy industry had caused energy prices to plummet, forcing many energy companies into capital crunches
- This rampant need for capital created an ideal opportunity to purchase energy assets at attractive valuations
- The Company sought financing to acquire specific geothermal assets in California
Solution:
- Cappello Global, LLC (Cappello) formed the investment company, assembled a talented team to manage the day-to-day operations and raised the requisite capital facilities to fund the acquisitions
- Cappello conducted and facilitated extensive company and market due diligence while working with management to ensure a selective and efficient process with minimal interruption to business operations
- In a short amount of time, Cappello successfully executed a private placement of long-term debt with a major financial institution
- Cappello ran a competitive process among capital providers for long-term debt seeking attractive rates and pricing
- The Company continued to fulfill significant sales contracts and fund turnkey operations
- Cappello served as exclusive financial advisor to Western Energy Corp.
Geo East Mesa L.P. (AMEX: GEO)
Client:
- Geo East Mesa L.P. is a wholly-owned subsidiary of Geothermal Resources International (AMEX: GEO) (Geo East Mesa or the Company), the worlds largest independent geothermal energy company with assets in 14 countries
- The Companys activities include the exploration, development and operation of geothermal steam fields, pipeline systems, power plants and electricity production
Situation:
- Geo East Mesa held contracts to sell power to municipalities and contracts with turbine manufacturers
- The Company was seeking project financing to do a green field development of a geothermal field with 20+ geothermal water wells
- In addition, the Company needed to fund certain turnkey construction contracts, complete turbine manufacturing contracts with a low cost of capital and extend upon their available working capital with lower-cost, long-term debt in the market
- With substantial fixed assets, the Company had a strong collateral base to apply leverage, but required assistance in attracting efficient capital
Solution:
- Geo East Mesa engaged Cappello Global, LLC (Cappello) to raise substantial equity and debt capital to develop a plant and support the related power sales contracts
- As part of a series of financings, Cappello arranged $109.0 million in project finance debt
- Cappello conducted and facilitated extensive company and market due diligence while working with management to ensure a selective and efficient process with minimal interruption of business operations
- Cappello ran a competitive process among capital providers for long term debt seeking attractive rates and pricing
- The Company continued to fulfill significant power sales contracts and fund turnkey contracts
- Cappello served as exclusive financial advisor to Geo East Mesa L.P.
Strategic Advisory
Many business owners and leaders benefit from third party strategic advisory services. Strategic advice may be needed to: assess growth or transaction alternatives; develop a long-term strategic plan; develop or enhance a board of directors; augment management teams; or, assess and/or structure third party partnerships.
Given our extensive transaction experience, institutional relationships and deep market knowledge gained over many market cycles, Cappello professionals are in a unique position to advise on strategic matters. We provide the following strategic advisory services to public and private companies:
- Long-term strategic planning
- Exit strategy planning
- Unsolicited bid evaluation
- Transaction preparedness audit
- Joint ventures and strategic partnerships
- Parallel transaction processes
- Board formation, recruiting and service
- Senior team assessment
Selected Cappello Strategic Advisory case studies:
IrisGuard, Inc.
Client:
- IrisGuard, Inc. (IrisGuard or the Company) is a global leader in iris recognition technology and solutions, with operations in the U.K., U.A.E., Switzerland and Jordan
- The Companys technology is used in large-scale border control and illegal immigration programs as well as commercial applications such as banking
- IrisGuard provides the technology behind the worlds largest, longest running and most heavily utilized civil iris recognition deployment, the U.A.E. Expellee Tracking Program
- The Company solution is deployed at all border entry points within the U.A.E. (air, land, and sea ports), creating a database of 1.85 million iris records, representing 160 nationalities, with 25 million people screened
- 29 trillion iris cross comparisons have been conducted; 410,000 expellees have been captured, with no false matches reported to date
- IrisGuard was the first company to commercialize an integrated iris recognition solution within the commercial banking sector
Situation:
- The Company sought an institutional partner that could provide both strategic value and growth capital to expedite their long-term strategic plan
- IrisGuard sought a partner with commercial and investment experience in international markets and the ability to open new sales channels for IrisGuard
- The Companys founders also wished to achieve partial liquidity
- In addition to advising on a successful minority recapitalization, the Cappello team was asked to provide long term strategic advisory services
Solution:
- Cappello went beyond the traditional investment banking role in helping the Company to prepare for this transaction, including identifying, evaluating and recruiting senior executives and advisory board members. and the introduction of a number of strategic relationships (legal, accounting, marketing and potential customers)
- World class board members Cappello recruited included Fran Townsend, former director of Homeland Security, and Les Biller, former COO of Wells Fargo
- Alex Cappello served as a member of IrisGuards board for 6 years, where he helped the company to formalize strategic planning, improve financial reporting and internal controls and raise capital.
- Cappello served as exclusive strategic and financial advisor to IrisGuard
Advanced Biotherapy (NASD: ADVB)
Client:
- Advanced Biotherapy, Inc. (NASD: ADVB) (Advanced Biotherapy or the Company) develops therapeutics for a range of autoimmune diseases based on an anti-cytokine platform technology
- Its biotechnology platform involves the use of antibodies directed against certain selected cytokines
- The Company plans to develop drugs through out-licensing arrangements to treat a range of autoimmune diseases
Situation:
- Advanced Biotherapy faced a number of challenging business issues: its publicly-traded stock suffered from low volume; while the Company lacked sponsorship, was not current with public filings and was capital constrained
Solution:
- The Company engaged Cappello Global, LLC (Cappello) to assist in strategic advisory needs to help mitigate the Companys capital constraints
- Cappello evaluated the Companys intellectual property, potential market and strategic options, and determined that the Company had significant unrealized value
- Over the course of several years, Cappello advised in hiring legal counsel, filing new patents, upgrading the quality of existing patents, building its systems and controls, establishing a board of directors, developing strategic alliances with partners and medical institutions and executing a private placement
- Cappello served as exclusive financial advisor to Advanced Biotherapy, Inc.
AmRest Holdings N.V. (WSE: EAT)
Client:
- AmRest Holdings N.V. (WSE: EAT) (AmRest or the Company), is the largest operator of YUM! franchises in Europe
- The Company owns and operates more than 100 Pizza Hut and Kentucky Fried Chicken restaurants in Poland and the Czech Republic
- AmRest owns the La Tagliatella brand, which is being developed internationally as both Company operated restaurants and franchised stores
- AmRest acquired two unique brands operating in China - Blue Frog and Kabb
Situation:
- Prior to going public, AmRest was considering a potential sale of their business
- The Company had potential inbound interest from other quick service restaurant companies and wanted to explore the potential for a strategic sale
- In addition, AmRest sought capital to buy out a significant shareholder and continue to expand operations
- The Company needed to develop a financing strategy that would allow continued growth and expansion while working within the restrictions of its franchise agreement with YUM!
Solution:
- AmRest hired Cappello Global, LLC (Cappello) to explore a strategic sale and the consideration of an IPO while following the path to greatest shareholder value
- Cappello assisted management in developing and assessing a wide variety of strategic and financing options, resulting in offers representing significant value to shareholders
- The process included the identification and evaluation of potential strategic and financial partners in Europe, the U.S. and Asia
- Outsized valuations in the IPO markets at the time enabled the Company to list at a valuation that could not be obtained in the private markets
- The strategic interest generated by Cappellos efforts influenced the underwriter to price the IPO at a much higher valuation than was originally intended
- Cappello ultimately advised the Company to proceed with a public listing on the Polish exchange, which was successful and oversubscribed
- Cappello served as exclusive strategic advisor to AmRest Holdings N.V.
Restructuring
As a result of the volatility of the market or business cycle, or other circumstances, many public and private businesses will have a need for restructuring services. Restructuring services may be needed to: restructure existing financing arrangements; shed non-core assets; effect a material shift in business focus; obtain fresh capital to refinance existing obligations, unlock intrinsic value; or, better position a company for growth. A restructuring may require guiding shareholders, creditors and executives through a court supervised or out of court restructuring process, which are highly specialized areas.
Cappello has extensive restructuring experience, having advised in restructuring situations with an aggregate value in the billions of dollars. Our institutional relationships, depth of experience and reputation as an advisor are significant assets to our clients in restructuring situations. We provide the following restructuring services to public and private companies:
- Restructuring of existing equity and debt capital
- Financing to replace existing equity and debt investors
- In court and out of court restructurings
- 363 sales
- Bankruptcy advisory
Selected Cappello Restructuring case studies:
WHX Corp.
Client:
- Wheeling Pittsburgh Steel Corporation (Wheeling Pittsburgh or the Company) is a steel manufacturing conglomerate headquartered in New York City and founded in 1920
- The Company has 15 operating units whose businesses range from the electroplating of automotive parts to the manufacturing of roofing bolts
- Cappello Global, LLC (Cappello) represented the convertible preferred investors who formed a committee prior to Wheeling Pittsburghs petition for relief under Chapter 11 of the bankruptcy code
Situation:
- A committee of convertible preferred shareholders was formed with the intent to reach an agreement with management to recapitalize the Company
- Wheeling Pittsburgh was overleveraged and could not refinance the Companys senior notes on reasonable terms and did not have enough liquidity to service the debt
Solution:
- Cappello met with management and conducted due diligence visits to the majority of Wheeling Pittsburghs operating units in order to learn about the various businesses and gain an understanding of their prospects, as well as to form an opinion on managements financial projections
- Cappello worked with the committee on various restructuring and capital raising possibilities, and interacted with Wheeling Pittsburgh management to reach a mutually acceptable agreement
- Wheeling Pittsburgh filed a petition for relief under Chapter 11 of the bankruptcy code
- Cappello served as exclusive financial advisor to the convertible preferred investors of Wheeling Pittsburgh Steel Corporation
Evergreen Holdings, Inc.
Client:
- Evergreen Oil, Inc. (Evergreen, the Debtor or the Company) operates an oil re-refinery facility and environmental services business, including the collection of used motor oil, glycol, waste water and drums, located in Newark, California
- The Company is the only true re-refiner of used oil in California and it re-refines approximately 11% of the States waste oil, in addition to successfully licensing its plant systems globally
Situation:
- Evergreens cash flow was impacted by an accidental fire at its Newark facility that affected both its processing trains, limiting its operations and revenue generation
- Following the delayed restart of both processing trains, the Company was faced with a deteriorating oil collections business and poor liquidity
- Despite genuine buyer interest, additional capital injections from Guggenheim and repeated covenant forbearance, the Company was unable to consummate a sale transaction in time
Solution:
- Guggenheim Corporate Funding, LLC (Guggenheim) was brought in by Cappello Global, LLC (Cappello) to refinance Evergreens existing credit facilities, providing a $40.0 million senior secured credit facility
- Evergreen entered into California state bankruptcy protection on a consensual basis with its senior lender, Guggenheim, who also provided a $6.0 million DIP facility
- Shortly after entering bankruptcy, Cappello was engaged by the Debtor and approved by the bankruptcy court as the exclusive financial advisor to run a §363 sale process to sell Evergreen and maximize proceeds for the Debtors estate
- Cappello ran a comprehensive and competitive sales process reaching out to a wide range of parties and highlighting the strategic importance of Evergreens California assets
- Clean Harbors, Inc., a large U.S. based environmental services business, which also owns the Safety-Kleen re-refinery business, emerged as the stalking horse bidder
- After a comprehensive §363 sales process, parent company Evergreen Environmental Holdings, Inc. and operating subsidiary Evergreen were sold to Clean Harbors, Inc. in a stock transaction, pursuant to a Chapter 11 Plan of Reorganization, for a base purchase price of $60.5 million, plus a net working capital adjustment
- The Debtors estate retained all proceeds in relation to the insurance and tax receivables, with an estimated book value in excess of $18 million
- Cappello served as exclusive financial advisor to Evergreen Oil, Inc.
All American Oil and Gas Inc.
Client:
- All American Oil & Gas, Inc. (AAOG or the Company) is a San Antonio, Texas-based independent upstream oil and gas operator, founded in 2003 to acquire underdeveloped assets
- Kern River Holdings Inc. (KRH), AAOGs principal operating subsidiary, owns and operates six leases in Californias Kern River Field totaling 115 acres where it has implemented a state-of-the-art steamflood extraction method successfully exploiting long-lived shallow reserves
Situation:
- AAOG engaged Cappello Global, LLC and Niagara International Capital Limited (collectively, Cappello) to assist in negotiations with KRHs existing lender (Lender) and to evaluate financing alternatives
- Cappello evaluated alternatives for the Companys board of directors with respect to value and financing options associated with repurchasing certain Lender warrants and an Overriding Royalty Interest (ORRI)
Solution:
- Cappello conducted and facilitated extensive due diligence, strategic evaluation of financing alternatives, board and shareholder reporting and Lender negotiations, while working with management to ensure an efficient process with minimal interruption to business operations
- AAOG and KRH executed an amendment to KRHs credit facility with its existing Lender converting the Lender warrants and ORRI to debt
- The restructuring addressed certain covenant violations under the existing credit facility, and resulted in the acquisition by KRH of the Lenders equity and ORRI
- The seamless conversion of the Lenders ORRI and warrants to debt allowed for consolidating the Companys assets to position AAOG and KRH for a comprehensive refinancing process
- Cappello served as exclusive financial advisor to All American Oil & Gas, Inc.
Valuation
Many public and private businesses require professional, third party valuation services. Common situations requiring valuation services may include:
- Valuing private company equity interests in connection with a recapitalization or shareholder buyout;
- Annual valuations for ESOP-owned companies;
- Public company fairness opinions in connection with M&A;
- Purchase price allocations in connection with M&A;
- Solvency opinions, etc.
Ensuring that a valuation is accurate, complete and able to withstand potential legal challenges requires in-depth research, detailed financial analysis, deep and current market knowledge and an experienced valuation team.
Cappello professionals have successfully completed a wide range of valuation assignments, from private and public company valuations to fairness opinions in connection with a major sale or merger. Our senior team focus, comprehensive due diligence, and fundamental approach to valuation analysis have earned us a reputation for delivering industry leading valuation services.
Selected Cappello Valuation services engagements:
Books-A-Million, Inc.
Hanmi Financial Corp. (NASDAQ: HAFC)
Qualcomm Incorporated
