July 1, 2008

Miami Company Agrees to Buy Shapes

By Joseph N. DiStefano, The Philadelphia Inquirer

Jul. 1--A Miami company is set to take over one of South Jersey's largest employers next week after winning concessions from unions representing its 1,000 workers.

H.I.G. Capital L.L.C. is scheduled to close the $91.5 million deal for Shapes/Arch Holdings L.L.C. on July 8, said J. Scott Victor, senior managing director and cohead of the Special Situations Group at National City Investment Banking, West Conshohocken, which is overseeing the sale.

H.I.G. agreed to pay $31.5 million in cash and take over Shapes' $60 million bank debt to CIT Group Inc. and other lenders.

The deal will transfer Shapes' aluminum extruder in Delair and its steel, vinyl and aluminum-fabricating plants, which are at sites in Pennsauken and in Bensalem, from the company's founding Kendall family and its managers to H.I.G.

Teamsters Local 627 and other Shapes unions agreed that Shapes would stop funding the workers' pension plan, Victor said. In court filings last week, Shapes' attorneys said they needed the union agreement before closing the sale. Local 627 officials did not return calls seeking comment.

H.I.G. has been buying up aluminum extruders around the country. The companies heat metal and stretch it into shapes for use in construction and in vehicles.

In 2005, H.I.G. bought Signature Aluminum Inc., of Greenville, Pa. The next year it added Temroc Metals Inc., of Hamel, Minn., and Atlantic Aluminum L.L.C., of Lumber Bridge, N.C. Temroc and Atlantic were merged into Signature.

Sean Ozbolt, vice president of the H.I.G. affiliate that negotiated the Shapes sale and the Signature deals, did not return calls for comment on H.I.G.'s plans for Shapes. Victor said Signature and Shapes were not direct competitors.

Shapes filed for Chapter 11 bankruptcy protection in March, citing a drop in orders as the economy slowed last year. Sales totaled about $270 million last year.

Chief executive officer Steve Grabell had hoped to sell the company to Versa Capital Management Inc., of Philadelphia. But that plan was challenged by creditors and by H.I.G., which previously had negotiated to purchase Shapes. In May, U.S. Bankruptcy Judge Gloria M. Burns ordered Shapes to recruit other bidders. The firm hired Victor to seek a better deal.

Versa had offered $26 million for Shapes, plus taking over its debt. That offer included $500,000 to split among unsecured creditors, Victor said.

The H.I.G. agreement includes $5 million to split among creditors. That is just 11 cents on the dollar for Shapes' estimated $45 million in debt, but it is 10 times what Versa offered. Versa spokeswoman Kristy Lash had no immediate comment.

Contact staff writer Joseph N. DiStefano at 215-854-5194 or [email protected]


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