Overview
St. Cloud is a leading private investment firm focused on providing growth capital to lower middle market companies. We have over $200 million of committed capital under active management. St. Cloud typically invests between $5 million - $15 million per transaction in private and public companies with revenues of $10 million - $100 million across a wide range of industries. St. Cloud makes investments in a combination of debt and equity securities to participate in acquisitions, recapitalizations, buyouts and organic growth. St. Cloud targets well-managed, undervalued companies with either successful products or services, proven technologies, or market niches.
Investment Approach
St. Cloud prides itself on providing innovative financing solutions to entrepreneurial owned companies and smaller publicly owned companies. Our extensive inter-generational experience and flexible investment approach allows for our diverse range of transaction types. St. Cloud excels in customizing investment structure to fit the unique characteristics of each company. We consider ourselves strategic and financial partners in the companies we invest in and strive to maximize returns for all stakeholders.
Investment Process
We seek opportunities with solid management teams, proven products and substantial growth potential. Our investment process includes rigorous due diligence prior to making an investment. We welcome investment referrals from investment banking firms, brokers, lenders, attorneys, accountants, consultants, business executives and other investors. All information provided to us is treated confidentially.
Deal Structure
Our investments are typically structured as a combination of debt and equity securities. The debt portion of our investments may be structured as senior or junior debt and may be partially or fully secured. We currently invest between $5 million and $15 million per transaction, and we may participate with a network of co-investors. We offer flexible and customized investment structures to fit the specific needs and resources of each company. We will participate as the sole investor, act as lead for an investor group or co-invest with other investors including other private equity funds. Our investments may be in conjunction with other debt or equity investments, which we may assist in arranging.
We develop close partnerships with the companies in which we make investments. Typically, one or more St. Cloud principal or advisor will serve on the Board of Directors. In addition, our support for our portfolio companies can involve making available appropriate additional consulting and advisory services from affiliated or third party sources. Our common goal with each of our portfolio companies is maximizing their performance and valuation.
Select Portfolio Investments
St. Cloud invested in Frontline Acquisition Inc. in the form of senior secured notes, subordinated secured notes with warrants, and common and preferred stock. The proceeds were used to acquire all the assets of Frontline Sales Inc. and to fund future growth. Frontline Sales is a leading manufacturer and supplier of safety products and programs primarily to large, multi-unit operators of supermarkets, restaurants and retail stores. The company also has significant e-commerce capabilities that provide its customers with ordering consistency and ease.
St. Cloud invested in National Holdings Corporation, utilizing senior subordinated convertible notes. The proceeds will be used to fund merger related costs with vFinance, Inc, and provide additional working capital.The Company, through its wholly owned subsidiary, National Securities Corporation, provides securities brokerage and investment services throughout the United States. It also provides corporate finance and investment banking services, including underwriting the sale of securities to the public and arranging for the private placement of securities with investors.
St. Cloud invested in CinnaWorkS, LLC, Sweet Candy, LLC, and Signature Distribution in the form of senior secured bridge notes and senior notes with warrants. The proceeds will be used to recapitalize the company's balance sheet and provide capital for growth. CinnaWorks is the country's largest franchisee of Cinnabon bakeries, with over 140 locations in 22 states. Sweet Factory is the nation’s largest bulk candy retailer with 98 company-owned and 23 franchised locations in 26 states. Signature Distribution is a distribution company that primarily serves Cinnaworks and Sweet Factory stores.
St. Cloud invested in Petwatch Animal Hospitals, Inc., in the form of senior subordinated convertible notes with penny warrants and common stock. The capital will be used primarily for funding acquisitions. PetWatch's objective is to become a preferred provider of high quality pet care by offering a broad array of pet care services within regional clusters by consolidating veterinary clinics and hospitals in regional markets.
| SecureOne Data Solutions, LLC (formerly Cal Coast Data Entry, Inc.) |
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St. Cloud invested in SecureOne Data Solutions, LLC, in the form of senior subordinated promissory notes with warrants. The capital will be used to fund acquisitions and organic growth. SecureOne Data Solutions is one of the leading comprehensive business process outsourcing providers in the southwestern U.S. with offices in Phoenix, AZ, Cerritos, CA, and Nogales, Sonora, Mexico.
St. Cloud invested in Seven Wells, LLC ("i.e. Distribution") in the form of senior secured promissory notes. The capital will be used to finance the acquisition of the World Industries brand. i.e. Distribution manufactures and distributes under license World Industries branded footwear and snowboard products (equipment and footwear) throughout North America targeted to males, 7-14 years old.
St. Cloud invested in TMS, Inc. in the form of senior secured convertible notes. The capital will be used to acquire new customers and for working capital. TMS is a leading national direct-to-consumer provider of Medicare reimbursed products in the United States and Puerto Rico.
St. Cloud invested in Kalologie Skincare, LLC, in the form of secured promissory notes with a membership interest. The capital will be used primarily for opening new locations and for working capital. Kalologie is a leading international specialty retailer of high-end cosmetic dermatology treatments and cosmeceutical products with multiple retail locations in Los Angeles and Tokyo.
St. Cloud invested in Demand Media, Inc. via convertible preferred stock. The Company has developed a unique platform that leverages cutting edge, user-driven publishing, community, and monetization tools in order to define the next generation of new media companies. The company’s portfolio includes nearly 150,000 domain names across multiple content categories, from which revenue is generated through paid advertisements.
St. Cloud invested in Security Contractor Services, Inc., in the form of senior subordinated promissory notes and common stock. The investment was part of a buyout led by St. Cloud. The capital will be used to purchase all of the equity of the Company and provide working capital. SCS is a leading fencing wholesaler and rental fencing provider that has served the fencing industry in the Western United States for over 40 years. SCS derives its competitive advantage by offering a high degree of service to sectors of the market that are underserved by the large players in the industry.
St. Cloud invested in XLNT Veterinary Care, Inc. ("Pet DRx”) utilizing a combination of senior secured convertible notes with warrants and convertible preferred stock. The Company owns and operates veterinary hospitals in California and is driving consolidation within the veterinary care industry in selected regional markets through internal growth and the acquisition of established veterinary hospitals. In January 2008, XLNT was acquired by Echo Healthcare Acquisition Corp. a healthcare focused SPAC (“Special Purpose Acquisition Company”) in an all stock transaction. Echo (renamed “Pet DRx” after the acquisition) (PDXC.OB) continues to focus on consolidating the veterinary care industry primarily through acquisitions.
St. Cloud invested in Meritage Retail Network, Inc., in senior subordinated promissory notes and common stock. The investment was part of a buyout led by St. Cloud. The capital will be used to purchase all of the equity of the Company. The Company is a leading online retailer and distributor of pool tables and related game room furniture.
St. Cloud invested in Club Holdings, LLC, in the form of Series B preferred stock. The funds will be used for working capital and acquisitions. Club Holdings provides hospitality services to members at a variety of destinations including: Telluride, Cabo San Lucas, Napa, New York City, Amelia Island, Hawaii, Scottsdale, Palm Springs, Jackson Hole, Kiawah Island, and Beaver Creek.
St. Cloud invested in Eastern Mountain Sports, Inc. (“EMS”) in a combination of senior subordinated promissory notes, warrants and preferred stock. St. Cloud is a member of an investment group, led by Whitney & Co., LLC, that funded the management-led buyout of EMS. Based in Peterborough, NH, EMS is one of the leading outdoor specialty retailers with over 80 stores across 16 states. EMS designs and sells products for outdoor athletes and enthusiasts who participate in a variety of sports such as mountaineering, backpacking, camping, hiking, adventure racing, climbing, kayaking, mountain biking and snow sports.
St. Cloud invested in the common stock of Continucare Corporation as part of a private placement. The funds will be used for the retirement of long-term debt and for working capital in connection with the introduction of a new management team. Based in Miami, Florida, with 15 locations, Continucare is a leading regional provider of outpatient healthcare services through medical centers and affiliated doctors. The Company provides this service to the membership of managed care partners. St. Cloud has already sold approximately half of its position in Continucare.
St. Cloud invested in Compact Power, Inc. in a combination of participating preferred stock and senior subordinated promissory notes with warrants. The investment will be used for acquisitions and working capital. Compact Power is a leading wholesale distributor of revolutionary labor-saving products. Its branded lines of compact utility equipment are sold in the landscape, construction, utility and agricultural markets.
Select Realized Investments
St. Cloud invested in Advanced H2O, Inc. in the form of subordinated secured promissory notes with warrants. The investment was part of a debt offering led by St. Cloud. The capital was used to refinance a lease on bottle blowing equipment, to purchase new equipment and for working capital. Advanced H2O is the leading producer and distributor of private label bottled water products in the Pacific Northwest. The Company was eventually sold to LaSalle Capital Group, L.P. St. Cloud's subordinated secured promissory notes were repaid in full and the warrants were sold.
St. Cloud invested in Computer Motion via Series C preferred equity. This capital funded Computer Motion’s sales and marketing activities, research and development, and patent related issues. Computer Motion, Inc. develops, manufactures and markets proprietary robotic and computerized surgical systems that enhance a surgeon's performance and centralize and simplify the surgeon's control of the operating room. Computer Motion was later acquired by Intuitive Surgical, Inc. (Nasdaq: ISRG). As a result, St. Cloud exchanged its position in Computer Motion for shares of Intuitive Surgical stock.
St. Cloud invested in senior secured promissory notes with warrants of Concepts Direct, Inc., a direct marketing company that sells labels, notepads, home decorative items, music-related collectibles, and casual apparel. St. Cloud eventually sold its promissory notes and common stock to the Chairman and CEO of the Company in what was essentially a going private transaction
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St. Cloud provided Diamond Contract Services, Inc. with financing comprised of senior subordinated promissory notes with warrants and a letter of credit. The funds were used for working capital enabling the Company to take on new accounts. The Company provides janitorial service to colleges and universities, governmental institutions, hotels and commercial properties. St. Cloud's notes were repaid in full and warrants were repurchased by the Company.
St. Cloud invested in Eclipse Aviation Corporation in the form of senior secured promissory notes with warrants. Eclipse Aviation designs, certifies and produces modern, affordable jet aircrafts that will revolutionize the transportation market. Eclipse Aviation has developed and produced its innovative product, a six place, twin-turbofan jet aircraft. At a sale price of $1.3 million, the Eclipse 500 is changing the value proposition for private jet travel. Eclipse repaid St. Cloud’s notes. St. Cloud still retains its equity position in the Company.
St. Cloud invested in Pacific Groservice, Inc. in a combination of senior and junior subordinated promissory notes with warrants. The investment was used for the acquisition of Pacific Groservice's operations. With facilities in San Jose, Sacramento, Oakland, and San Francisco, Pacific Groservice is the leading wholesaler to small convenience stores, grocery chains, fast food restaurants, and vending service retailers in Northern California. Pacific Groservice's dual offerings: cash & carry and direct delivery allow it to uniquely service small retailers and restaurateurs. St. Cloud's notes were repaid in full. St. Cloud still retains its equity position in the Company.
St. Cloud invested in TEGSCO, LLC in the form of short-term senior secured promissory notes. In October 2004, TEGSCO, LLC repaid the short-term notes and entered into a long-term financing comprised of senior secured promissory notes with equity features. The investment was used for working capital purposes and was placed in conjunction with an emergency interim contract and a subsequent five-year contract signed between TEGSCO and the City and County of San Francisco. TEGSCO, LLC, which operates as San Francisco AutoReturn, provides services for towing, storage, and disposal of abandoned and illegally parked vehicles. St. Cloud's notes were repaid in full. St. Cloud retains an equity position in the Company.
Our Team
Marshall Geller
Mr. Geller is a Senior Managing Director of St. Cloud. He was formerly the Chairman and CEO of Geller & Friend Capital Partners, a Los Angeles based private merchant bank. He has extensive experience initiating, arranging and making investments in public and private companies. Mr. Geller spent over twenty years as Senior Managing Director for Bear, Stearns & Company, with oversight of all operations in Los Angeles, San Francisco, Chicago, Hong Kong and the Far East. He is currently a director of public companies including 1st Century Bank, NA (Nasdaq:FCNA), ValueVision Media, Inc. (Nasdaq:VVTV), GP Strategies Corporation (NYSE:GPX), National Holdings Corporation (NHLD.OB), and SCPIE Holdings, Inc. (NYSE:SKP). Mr. Geller also serves as a member of the Board of Governors of Cedars-Sinai Medical Center, Los Angeles. He was previously the Interim Co-Chairman of Hexcel Corporation (NYSE:HXL) and Interim President and COO of Players International, Inc. Mr. Geller graduated from California State University, Los Angeles, with a BS in Business Administration, where he currently serves on the Dean’s Advisory Council for the College of Business & Economics.
Kacy Rozelle
Mr. Rozelle is a Managing Director of St. Cloud. Mr. Rozelle's middle market and growth company corporate finance and investment banking experience includes ten years at Jefferies & Company, Inc., where he served as a member of the firm's Taxable Fixed Income Executive Committee, and he directly participated in the structuring and placement of more than $40 billion of securities, including more than $10 billion of public and private equity. Mr. Rozelle began his career as an Associate with the Los Angeles based Houlihan Lokey Howard & Zukin, where he assisted on a wide range of services for middle market companies including mergers and acquisitions; financial opinions; and valuation and advisory assignments. Mr. Rozelle serves on the Board of Directors of San Francisco AutoReturn, LLC, Kalologie Skincare, Inc. and the UCLA Jonsson Cancer Center Foundation. He also holds an observer seat on the Board of Directors of Pacific Groservice, Inc. Mr. Rozelle earned an MBA from the University of Texas at Austin and a BS in Finance from Virginia Tech.
Robert Lautz
Mr. Lautz is a Managing Director of St. Cloud. Mr. Lautz was formerly the Chairman of REO.com, the nations leading Internet-based sales mechanism for bank foreclosed properties. Prior to that he served as the CEO of ListingLink, the original Internet-based residential property multiple listing service. Mr. Lautz formed and was Chairman and CEO of Indenet, Inc., a Nasdaq listed private satellite-based network that delivered digital advertisements and programming to the 3000+ national broadcast and cable television networks. From 1994 to 1997, he built Indenet from a public shell with $4 million in cash to a company with over $50 million in revenue, $120 million in market value and 650 employees in 19 facilities around the world. Mr. Lautz also owned and operated Peerless Capital, a venture capital business which invested in various management led leveraged buyouts and private equity transactions. Mr. Lautz began his career within Citibank's Operating Group where he rose to become the Senior Financial Officer, responsible for all financial functions and strategic planning for his division. He currently serves on the Board of Directors of Compact Power, Inc., Security Contractor Services, Inc., MEDirect Latino, Inc. (MLTO.PK), SecureOne Data Solutions, LLC,and National Holdings Corporation (NHLD.OB), and as a Board observer for XLNT Veterinary Care, Inc. Mr. Lautz earned a Master's degree from the American Graduate School of International Management (Thunderbird), and a BS in Business Administration from Miami University in Oxford, Ohio.
Benjamin Hom
Mr. Hom is a Managing Director of St. Cloud. Previously, Mr. Hom worked in the Investment Banking Group at Bear, Stearns & Company, where his experience included mergers and acquisitions, leveraged buyouts, public and private equity offerings, and debt financings. Mr. Hom focused on middle market clients in a variety of industries including business services, restaurants, communications, technology, and health care services. His prior experience also includes working at KPMG and Parnassus Investments. Mr. Hom currently serves on the Board of Directors of Meritage Retail Network, Inc and CinnaWorks, LLC. Mr. Hom received a Bachelor of Arts in Business & Economics, with a minor in Accounting, from the University of California, Los Angeles.
John Anderson III
Mr. Anderson is an Associate of St. Cloud. He formerly worked as an Associate in the Assurance and Business Advisory practice of PricewaterhouseCoopers, LLP (“PwC”). At PwC, Mr. Anderson worked with middle market clients in a variety of industries including retail, telecommunications and manufacturing. Mr. Anderson is a CPA. His prior experience includes working at Smith Barney and Kayne Anderson Rudnick Investment Management. Mr. Anderson earned a BA in Business Administration, Magna Cum Laude, from The Master’s College, located in Los Angeles, CA.
Brian Chow
Mr. Chow is an Associate of St. Cloud. Previously, Mr. Chow worked in the Business & Information Services Investment Banking Group at Banc of America Securities LLC, where his experience included mergers and acquisitions, leveraged buyouts, public and private equity offerings, and debt financings. His prior experience also includes working as an Associate in the Assurance and Business Advisory practice of Deloitte & Touche LLP in the Financial Services and Real Estate Group. Mr. Chow is a CPA. Mr. Chow received a Bachelor of Science in Accounting and Business Administration, with a concentration in Corporate Finance, from the University of Southern California.
Casey Tennyson
Mr. Tennyson is a Controller of St. Cloud. He was formerly a Senior Auditor at Deloitte & Touche LLP in the Financial Services Group. At Deloitte, his experience included planning and executing audit engagements, drafting financial statements, and supervising audit teams. Within the financial services industry, Mr. Tennyson focused on private equity funds, public mutual funds, hedge funds, along with clients in other industries including real estate, non-profit, and manufacturing. Mr. Tennyson is a CPA and graduated from Weber State University with a BS in Accounting.
Office
St. Cloud Capital, LLC
10866 Wilshire Blvd, Suite 1450
Los Angeles, CA 90024
Tel (310) 475-2700
Fax (310) 475-0550
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