Compass Diversified Holdings Announces Sale of Clean Earth
May 09 2019 - 6:02AM
Compass Diversified Holdings (NYSE: CODI), an owner of leading
middle market businesses, announced today that Compass Group
Diversified Holdings LLC (together with Compass Diversified
Holdings, “CODI” or the Company”) has entered into a definitive
agreement (the “Agreement”) to sell its majority owned subsidiary,
CEHI Acquisition Corporation, the parent company of Clean Earth,
Inc. ("Clean Earth"), to a wholly-owned subsidiary of Harsco
Corporation (NYSE: HSC). Under the terms of the Agreement, Clean
Earth will be sold to Harsco Corporation for approximately $625
million in cash. The closing of this transaction is subject to
customary terms and conditions, including regulatory approval, and
is expected to occur within the next few months.
The Company expects to realize a gain on the
sale of Clean Earth of approximately $200 million and intends to
use the net proceeds to repay the remaining outstanding debt under
the Company's revolving credit facility and for general corporate
purposes.
Commenting on the transaction, Elias Sabo, CEO
of Compass Diversified Holdings, stated, “We began our partnership
with Clean Earth over four years ago and worked closely with its
strong management team to achieve significant growth. Specifically,
our success capitalizing on organic growth opportunities and
completing a number of compelling add-on acquisitions enabled Clean
Earth to meaningfully expand its geographic footprint, processing
capabilities and extensive service offerings, allowing the company
to achieve strong revenue and cash flow growth. We thank Chris
Dods, Bernie Guerin and the entire Clean Earth management team for
all of their hard work and dedication in realizing this extremely
favorable outcome and wish them continued success in the
future.”
Chris Dods, CEO of Clean Earth, stated, “CODI
has been an ideal partner, providing hands-on support, outstanding
guidance and growth capital to enable Clean Earth to best take
advantage of attractive opportunities. I would like to thank CODI
for their patient approach and commitment to invest in our
business, driving growth and further strengthening Clean Earth’s
brand, industry leadership and financial performance. The momentum
that they helped create will provide us with a strong platform for
the future.”
Mr. Sabo concluded, “The Clean Earth sale is our
second opportunistic divestiture of 2019 and once again
demonstrates the advantages of CODI’s investment strategy, drawing
on our permanent capital and management resources to strengthen our
subsidiaries and unlock substantial value. Following the closing of
this transaction, we expect to realize a gain on sale of
approximately $200 million, increasing total gains to shareholders
to over $1 billion since our IPO, and intend to use sale proceeds
to pay down debt and strengthen our balance sheet. Going forward,
we will continue to reinvest in our leading industrial and branded
consumer subsidiaries, while taking advantage of additional
platform and add-on acquisition opportunities, as well as pursing
divestitures that increase shareholder value. Providing
shareholders consistent and sizeable cash distributions also
continues to be a priority and based on the cashflows we anticipate
generating from our remaining leading subsidiaries, we are well
positioned to continue to distribute $1.44 per share on an annual
basis.”
Moelis & Company LLC and Houlihan Lokey
acted as financial advisors to CODI in connection with the
transaction. Squire Patton Boggs (US) LLP acted as legal counsel to
CODI.
About Compass Diversified Holdings
(“CODI”)
CODI owns and manages a diverse family of
established North American middle market businesses. Each of its
current subsidiaries is a leader in its niche market.
CODI maintains controlling ownership interests
in each of its subsidiaries in order to maximize its ability to
impact long term cash flow generation and value. The Company
provides both debt and equity capital for its subsidiaries,
contributing to their financial and operating flexibility. CODI
utilizes the cash flows generated by its subsidiaries to invest in
the long-term growth of the Company and to make cash distributions
to its shareholders.
Our nine majority-owned subsidiaries are engaged
in the following lines of business:
- The design and marketing of purpose-built tactical apparel and
gear serving a wide range of global customers
(5.11);
- The manufacture of quick-turn, small-run and production rigid
printed circuit boards (Advanced Circuits);
- The manufacture of engineered magnetic solutions for a wide
range of specialty applications and end-markets (Arnold
Magnetic Technologies);
- Environmental services for a variety of contaminated materials
including soils, dredged material, hazardous waste and drill
cuttings (Clean Earth);
- The design and marketing of wearable baby carriers, strollers
and related products (Ergobaby);
- The design and manufacture of custom molded protective foam
solutions and OE components (Foam
Fabricators);
- The design and manufacture of premium home and gun safes
(Liberty Safe);
- The manufacture and marketing of portable food warming fuels
for the hospitality and consumer markets, flameless candles and
house and garden lighting for the home decor market, and wickless
candle products used for home decor and fragrance systems
(The Sterno Group); and
- The design, manufacture and marketing of airguns, archery
products, optics and related accessories (Velocity
Outdoor).
This press release may contain certain forward-looking
statements, including statements with regard to the future
performance of CODI and expectations related to the sale of Clean
Earth. Words such as "believes," "expects," “anticipates,”
“intends,” "projects," and "future" or similar expressions, are
intended to identify forward-looking statements. These
forward-looking statements are subject to the inherent
uncertainties in predicting future results and conditions. Certain
factors could cause actual results to differ materially from those
projected in these forward-looking statements, and some of these
factors are enumerated in the risk factor discussion in the Form
10-K filed by CODI with the SEC for the year ended December 31,
2018 and other filings with the SEC. Except as required by law,
CODI undertakes no obligation to publicly update or revise any
forward-looking statements, whether as a result of new information,
future events or otherwise.
Compass Diversified Holdings |
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Investor Relations and Media Contact: |
Ryan J. Faulkingham |
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The IGB Group |
Chief Financial Officer |
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Leon Berman |
203.221.1703 |
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212.477.8438 |
ryan@compassequity.com |
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lberman@igbir.com |
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