Cornerstone Equity Investors will sell its investment in True Temper Corporation to company management and Gilbert Global Equity Partners and “related entities” in a deal that is expected to close “within the next 90 days”.
Terms of the deal agreement were not disclosed.
Gilbert Global Equity Partners was described in a company release as “one of the largest and most experienced private equity firms in the United States with a capital base of over $1.0 billion”. Cornerstone reportedly acquired its stake in True Temper Sports for approximately $207 million from Black & Decker in 1998.
For fiscal 2002, True Temper reported net income of $9.3 million on sales of $107.4 million. Net income for the 2003 third quarter jumped more than 53% to $2.3 million from $1.5 million in Q3 2002. Sales for the period increased 12.1% to $24.7 million from $22.0 million in the year-ago quarter. Nine-month 2003 YTD earnings were $8.6 million on sales of $88.8 million.
Cornerstone could pull out a return north of 20% if they manage to get a valuation in the range of 7x EBITDA. With 2003 EBITDA running about 12% ahead of the previous year results of $32.4 million, EBITDA could end up in the $36 million neighborhood, which would put a 7x deal around $252 million.
No changes in trade policies or personnel are anticipated with the pending change of ownership.
