Gordon Brothers Group Funds Successful Turnaround of F&F Foods
BOSTON, MA – Gordon Brothers Group, a global advisory, restructuring and investment firm specializing in the retail, consumer products, industrial and real estate sectors, announced today the sale of its senior secured debt in F&F Foods, Inc., a leading manufacturer of branded and private-label cough drops, mints and candies marketed under the Smith Brothers®, Daily C®, Sen-Sen®and Foxes® brands.
After funding a successful turnaround that saved hundreds of jobs in the Chicago area, Gordon Brothers has sold its senior debt position to Universal Holdings, an affiliate of GemCap, who subsequently purchased the assets of F&F from the Assignee (Development Specialists, Inc.) and placed them into Universal Holdings (a newly capitalized operating company) doing business as F&F Foods.
"Gordon Brothers has built its reputation on finding hidden value in companies undergoing change. We first recognized the underlying enterprise value in F&F Foods in January 2009, and ultimately acquired the company’s senior debt in a private transaction in March 2009," stated Robert M. Himmel, Co-President, Commercial & Industrial Division at Gordon Brothers Group. "The company had excellent product awareness, a strong market position and a dynamic pipeline of active purchase orders. We recognized however that it lacked the capital base and credit availability with its existing lenders to manufacture product, continue operations and fulfill orders."
On March 18, 2009, Gordon Brothers Group acquired the debt of Chicago-based F&F Foods and, in conjunction with the shareholders in F&F, immediately placed the privately held company into an Assignment for the Benefit of Creditors, an insolvency proceeding that operates under state law.
"Placing F&F Foods into an Assignment was a strategic move that was of great benefit to the company," points out John C. Wheeler of Development Specialists Inc., the Chicago-based firm selected by Gordon Brothers Group and the Shareholders in the company to serve as the Assignee to F&F Foods. "The assignment process allowed for operational and financial decisions to be made that moved the company from a loss to an operating profit in less than a year. As a result, several hundred jobs in the Chicago area were directly or indirectly preserved and an operational turnaround was successfully completed."
To fuel the turnaround process, Gordon Brothers Group provided ample capital to fund regular operations while closely monitoring all major financial decisions and expenditures on a weekly basis. Furthermore, Gordon Brothers Group provided the additional capital necessary to support the company's turnaround. This included a capital investment in new equipment that led to The Hershey Company awarding F&F Foods a multi-million dollar annual packaging contract for its Jolly Rancher Sticks product line.
In September 2009, Development Specialists, Inc. began to actively market and identify potential acquirers of the F&F assets who were interested in purchasing and operating a newly capitalized F&F Foods. The process attracted considerable attention including that of GemCap, a Santa Monica-based asset based lender that focuses on the finance of middle market companies.
"We were impressed with how Gordon Brothers Group effected such a rapid turnaround by carefully managing the financing of the business while in Assignment," said David Ellis, Co-President of GemCap. "This is an ideal time for GemCap to take over the funding and ownership of F&F and continue growing the company." As part of its acquisition, GemCap has injected significant new equity into the business to fund continued long-term growth.
The acquisition by Universal Holdings (a GemCap Affiliate) closed on February 26, 2010.###
About Gordon Brothers Group
Founded in 1903, Gordon Brothers Group (www.gordonbrothers.com) is a global advisory, restructuring and investment firm specializing in the retail, consumer products, industrial, and real estate sectors. Gordon Brothers Group maximizes value for both healthy and distressed companies by purchasing or selling all categories of assets, appraising assets, providing debt financing, making private equity investments, and operating businesses for extended periods. Gordon Brothers Group conducts over $50 billion worth of transactions and appraisals annually.
With headquarters in Santa Monica, Calif., GemCap (www.gemcapsolutions.com) is an asset-based lender specializing in senior-secured loans from $500,000 to $10 million. The company serves low and middle-market businesses within the United States.
About Development Specialists Inc. (DSI)
Based in Chicago, Development Specialists Inc. (www.dsi.biz) provides management and consulting services on behalf of lending institutions, secured and unsecured creditors, shareholders, bondholders and business owners.