Corrpro completes refinancing and recapitalization – capital structure stabilized; James A. Johnson Elected Chairman

Citation

(2004), "Corrpro completes refinancing and recapitalization – capital structure stabilized; James A. Johnson Elected Chairman", Anti-Corrosion Methods and Materials, Vol. 51 No. 5. https://doi.org/10.1108/acmm.2004.12851eab.022

Corrpro completes refinancing and recapitalization – capital structure stabilized; James A. Johnson Elected Chairman

Corrpro completes refinancing and recapitalization – capital structure stabilized; James A. Johnson Elected Chairman

Corrpro Companies, Inc. (AMEX:CO) have also announced the successful completion of its refinancing and recapitalization agreements. CorrPro Investments, LLC, an affiliate of Wingate Partners III, L.P. (“Wingate Partners”), invested fresh capital of $13 million cash in return for a new issue of preferred stock and warrants to acquire approximately 12.1 million shares of common stock of the Company at a nominal exercise price. Corrpro also entered into a new $40 million senior secured credit facility with CapitalSource Finance LLC (“CapitalSource”). The facility consists of a revolving credit line, a term loan with a five-year maturity and a letter of credit sub-facility. In addition, Corrpro issued $14 million in new secured subordinated notes to American Capital Strategies Ltd. (“American Capital”) (Nasdaq: ACAS) as well as warrants to acquire approximately 3.9 million shares of common stock of the Company at a nominal exercise price. As part of the refinancing, Corrpro repaid and terminated its prior revolving credit facility due 31 March 2004, and its outstanding senior notes due 15 January 2008. After taking into account the common stock dilution calculations described in the shareholder proxy materials, which include the newly-issued warrants, existing shareholders will own approximately 28 per cent of the fully-diluted shares.

“Our announcement today is the culmination of a successful process to restructure our business operations and allow us to strategically take advantage of our market leading position. This was made possible by the continuing support of our customers, employees, vendors, and shareholders”, commented Joseph W. Rog, Chief Executive Officer and President. “With our new financial team, led by Wingate Partners, we look forward to an improved operating environment with new investment in the business and the opportunity to enhance value for all our stakeholders”.

As contemplated by the transaction, Corrpro increased the size of its Board of Directors from seven to nine. Messrs Jay I. Applebaum, James A. Johnson, and Jason H. Reed, executives affiliated with Wingate Partners, have become directors, with Mr Johnson serving as Chairman of the Board. Messrs C. Richard Lynham, Harry W. Millis, Neal R. Restivo, Joseph W. Rog, and Dr Warren F. Rogers will continue to serve on the board. American Capital retains the right to designate a director to fill the remaining director vacancy. The Company plans to hold its annual meeting of shareholders in August 2004 after it has mailed its annual report to shareholders.

“Wingate's philosophy is to build on the existing strengths of companies. We have invested in Corrpro's business because its profile matches our other previous successes”, commented James A. Johnson, Corrpro's Chairman of the Board. “We were attracted to Corrpro because it is a leader in corrosion protection for the infrastructure, energy, and environmental markets where there are strong opportunities for growth. We see our role as bringing stability to the organization by helping to establish and prioritize the Company's goals, and by providing leadership to develop and implement a successful game plan to meet those goals. With a deep appreciation for the work of Corrpro's dedicated professionals, a firm commitment to accountability at all levels within the company, and a relentless focus on customer service, we are excited about our involvement with Corrpro and its people, who have a reputation for excellence within the industry. It is our intention to build on this proud heritage”.

Corrpro's financial advisor in this refinancing and recapitalization transaction was Brown Gibbons Lang & Company (“BGL”), a leading investment bank with offices in Cleveland and Chicago. BGL specializes in providing financial advisory services to middle-market companies nationwide with total enterprise values typically ranging from $20 million to $500 million.