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Where Can I Find a Financing Partner Willing to Invest in a Cyclical Industry?
Tooling Technology, LLC (Tooling Tech), produces high quality cast and machined tooling for plastic molding processes such as thermoforming, compression molding and blow molding primarily for the automotive industry. Headquartered in Fort Loramie, Ohio, the company operates multiple manufacturing facilities in the Midwest. PNC Mezzanine Capital (PNC MC) worked with Tooling Tech’s shareholders, led by independent sponsor Cognitive Capital, to recapitalize the company’s balance sheet in order to support future growth initiatives.
The Plan
After completing the buyout of Tooling Tech in 2006, Cognitive Capital was seeking a financial partner that understood the cyclical nature of the automotive industry, could help accelerate the growth of the company and had the wherewithal to facilitate the recapitalization and consolidation of its existing debt and equity partners. In February 2012, PNC MC was selected to complete the $17 million subordinated debt and equity investment based on the relationship with Cognitive Capital, experience investing in the automotive industry and the flexibility to provide all the necessary layers of junior capital.
The Strategy
PNC MC’s junior capital investment supported the recapitalization of the company, refinanced Cognitive Capital’s other financial partners and provided a dividend to management, all of which were integral in positioning the Company to execute on their outlined growth initiatives. PNC MC held two board seats and helped the company navigate the integration of a recent acquisition and numerous growth initiatives designed to take advantage of industry tailwinds.
The Result
After achieving significant growth and expanding its manufacturing capabilities, PNC MC, Cognitive Capital and management were able to sell Tooling Tech to a financial buyer in February 2014. The company’s ability to utilize PNC MC’s investment in a strategic and efficient manner helped generate an attractive valuation and a successful exit for Cognitive Capital and the management investors.
“PNC Mezzanine Capital is known to be a consistent provider of capital and understands the unique needs of growing companies in cyclical industries. The Tooling Technology deal was successful due to PNC MC’s ability to create a structure that met our needs and positioned the company to take advantage of the growth opportunities in front of them.”
-Ron Yokubison
Partner
Cognitive Capital