American Capital Strategies has invested an additional $19 million in its portfolio company Confluence Holdings Corp. to support the acquisition of the water sports business assets of Watermark Paddlesports Inc.American Capital's new investment takes the form of a senior term loan and senior subordinated debt. In addition to the new investment, American Capital owns senior subordinated debt, junior subordinated debt, junior unsecured subordinated debt and equity. American Capital's total current investment in Confluence is $61 million. GMAC Commercial Finance LLC is providing a revolving credit facility. Following the transaction, American Capital owns approximately 95% of Confluence on a fully diluted basis.
“Our investment in Confluence Holdings is an excellent example of American Capital's ability to assist in the growth of its portfolio companies,” said Gordon O'Brien, American Capital Managing Director, Operations. “The Watermark acquisition is a significant development for our investment in Confluence and we expect to see considerable value created.”
“The combination of Confluence and Watermark creates a premier market player in the growing, attractive paddlesports market,” said Myung Yi, American Capital Principal, Operations. “By combining Watermark and Confluence's excellent brands, Confluence will have the most comprehensive offering of brands in the paddlesports market, thereby strengthening its market leadership.”
“The merged company will leverage the superior molding efficiencies developed by Confluence and the outstanding assembly process at Watermark to drive growth of the combined business,” said Bob Sharp, American Capital Principal, Operations.
Watermark brands include kayak leaders Dagger®, Perception®, and Mainstream®, in addition to Harmony® paddlesports accessories and AT Paddles.
American Capital first invested in Confluence Holdings in September 1998. Confluence's products are sold under the Mad River Canoe®, Wilderness Systems®, WindRider®, Voyageur®, and Wave Sport® brand names.
Confluence's customers include well-known sporting goods retailers and mass retailers such as Dick's Sporting Goods Inc. and its subsidiary Galyan's Trading Company, Inc., Recreational Equipment Inc., Eastern Mountain Sports, L.L. Bean Inc. and Bass Pro Shop.