Morgan Stanley launched a $195 million credit facility last week for Ohmstede, according to a banker. The deal consists of a five-year, $30 million revolver; a seven-year, $100 million first-lien term loan and an eight-year, $65 million second-lien term loan. Pricing is LIBOR plus 3% for the pro rata and LIBOR plus 6 3/4% on the second lien. The financing will be used by First Reserve Corp., in partnership with Ohmstede's management, to acquire Ohmstede from Tanglewood Investments, according to Michael Tiner, managing director at Tanglewood. Tiner declined further comment.
"Ohmstede was looking to be bought out," said Tim Day, director with First Reserve. "Once we heard it was going to be available, we jumped on it." Day also mentioned that Ohmstede has a "fantastic management team" that will not be changed after the acquisition. "That is one of the reasons we were so interested," he said. "They're actually putting some of their own money into it."
Beaumont, Texas-based Ohmstede manufactures and provides maintenance for heat exchangers devices used for transferring heat from one fluid to another in refrigeration, air conditioning, space heating, power production and chemical processing. First Reserve, based in Greenwich, Conn., is a private equity firm that specializes in the energy industry. The firm's most recent acquisition was of Industrial Power Generating Corp. in March. Tanglewood is a Houston-based private equity firm that deals in middle-market manufacturing and service companies. A representative from Ohmstede could not be reached.