AmSan Refinances, Plans for Growth

AmSan LLC, Deerfield, Ill., a leading independent distributor of jan/san products in the United States, recently refinanced its existing loans with new lenders, one of which is American Capital Strategies Ltd., Bethesda, Md., to the tune of $25 million. Merrill Lynch is the other investor, providing a revolving loan and senior financing.

American Capital’s investment takes the form of senior term debt, and according to Brian Maney, the company’s director of corporate communications, this is the first time it has invested in AmSan. However, the investment marks the sixth time American Capital has worked alongside AmSan’s majority owner, GTCR Golder Rauner LLC, Chicago, a private equity investment firm.

AmSan CEO Michael Mulhern said the five-year credit facility will give the company a “long runway” to continue expansion. “We have been, and will continue to look at fold-in acquisitions into our existing infrastructure, and certainly the timing of this deal as well as the cash flow that it affords us gives us the opportunity to continue down that path in a more aggressive way,” he said.

Founded in 1997 by GTCR Golder Rauner, AmSan grew considerably in its first four years by acquiring more than 40 jan/san businesses. Now, exceeding 60 locations in 40 states, AmSan services more than 50,000 customers.

American Capital Managing Director Tom Gregory said his company is backing a distribution management team that he believes has proven itself successful. “Its national presence allows it to service the needs of large regional and national customers … AmSan is well-positioned for continued growth and profitability within the industry.”

Mulhern said AmSan will concentrate on making new acquisitions in its current markets instead of going into new areas without infrastructure. The refinancing will allow the company to continue to perform as it has over the past three years, which have seen “terrific earnings growth,” according to Mulhern.

Currently, there are no plans to take the company public, a possibility that has been rumored for years.
“We’re very bullish on the performance of the company today and we love the prospects going forward,” Mulhern said. “At a time when we feel that the markets are appropriate and our performance in terms of the timing is where it needs to be, then we’ll evaluate those options.”

NEWS MAKERS

Study Looks At Demand For Paper vs. Plastic
A study from the Freedonia Group, a Cleveland-based industrial market research firm, has found that demand for paper and plastic packaging in competing markets will exceed 20 billion pounds in 2008.

The study, called “Paper Versus Plastic in Packaging,” also found that in markets where the two materials compete, plastic is gaining a stronger hold and is expected to corner nearly 50 percent of the packaging demand by 2008.

Corn: Transforming Food Into Function
While higher oil prices have driven the cost of traditional plastics up by about 40 percent over the past year, Nature Works, a subsidiary of Cargill Inc., a Minneapolis-based provider of food, agricultural and risk-management products and services, has found a way to turn corn into a biodegradable substance that can be used instead of its virtually indestructible counterpart, plastic.

The substance, called polylactic acid, or PLA, is anticipated to make huge gains as BASF, DuPont and Mitsubishi Chemical begin to use it. Over the past year and a half, PLA’s market price sank 65 percent while its U.S. market share is expected to increase to 25 percent annually through 2008.

Sudsing Up Can Save Children’s Lives
A study published by The Lancet found that children under age 5 who use soap during hand washing can reduce the number of pneumonia-related infections by over 50 percent. Research was conducted by the Centers for Disease Control (CDC) and Cincinnati-based Proctor & Gamble Co., and used a sample of 900 households in Karachi, Pakistan.

In its seventh acquisition in the past three years, Prophet 21, a Yardley, Pa.-based distribution technology provider, acquired Stanpak Systems, Suffield, Conn., another distribution technology solutions provider, in late June.

“We look for companies that have strong brand recognition and customer loyalty,” said Doug Levin, Prophet 21’s executive vice president. “[Stanpak is] in a market we already have a good position in, but they can help us strengthen that position.”

Prophet 21 will continue to support Stanpak’s 300 customers with investments and enhancements to the Stanpak product, said Levin. It will also continue to provide customer support for Stanpak’s product.

Levin said customers will also gain access to tools and forums offered on Prophet 21’s customer Web site.

The new brand will be known as Prophet 21/Stanpak. Financial information regarding the transaction was not released.

DadePaper, Miami, has acquired Gulf Paper Supply, Fort Walton, Fla. This is DadePaper’s fourth acquisition in the past 12 months.

The acquisition will expand DadePaper’s service and coverage of the Florida Panhandle. Many members of Gulf Paper Supply’s staff will remain with the company during the transition.

Specialty chemicals company Crompton Corp., Middlebury, Conn., acquired Great Lakes Chemical Corp., Indianapolis, for $2 billion in July to form a company now named Chemtura.

Over the next year, Chemtura will cut about 600 people from its 7,300-employee workforce. Where those losses will take place is not known.

Shareholders of Proctor & Gamble, Cincinnati, and Gillette Co., Boston, recently approved the merger of the two companies with 96 percent favoring the move.

The acquisition now faces regulatory review by the Federal Trade Commission.

Assuming the acquisition is successful, it would be Proctor & Gamble’s largest acquisition in its 167-year history.

Piedmont National, Atlanta, plans to buy St. Petersburg, Fla.-based Allstate Packaging Products Inc.

Piedmont is a privately-held distributor of packaging supplies and janitorial and paper products.

In late June, Congress passed the Junk Fax Prevention Act, and it was signed into law by President George W. Bush in July. The Act requires businesses to have prior permission from recipients before sending faxes.

As reported in SM’s June 2005 issue, companies will only be able to send commercial faxes without prior written permission in two ways: if they already have an established relationship with the recipient, or if a newly established business relationship (EBR) publicly provides its fax number or has published the number in a directory, advertisement or Web site.

The FCC granted a six-month stay requested by the ISSA and the Fax Ban Coalition; the regulation will take effect January 9, 2006.

The U.S. Environmental Protection Agency is developing a partnership with cleaning-product manufacturers and others to create a voluntary environmental labeling program for chemical cleaning products.

The labeling program will serve as an “environmental scorecard,” where companies can provide information on several environmental attributes of its products.

An informational meeting in September will end with the formation of a joint industry, government and public work group that will develop the program.

Changes to the Fair Credit Reporting Act took effect in June that require employers to ensure proper destruction and disposal of “consumer information.”

The information covered under the Act includes any reports such as credit standing, credit rating, personal characteristics and general character that is used in determining eligibility for business purposes such as insurance, credit or employment.

Means for destruction of records is not specified, but it applies to all records recorded on paper, electronic or any other form.

The Federal Trade Commission (FTC), which developed the rule, isn’t requiring employers to create a minimum period of retention of the records, nor does it specify a time frame in which destruction has to be completed. Employers do not have to report compliance or method of destruction to any federal, state or local government.

Failure to prove destruction of records could be grounds for negligence under the Fair Credit Reporting Act.

Federal Agencies Focus On The Renewable

According to Federal Times, a new Federal Bio-based Product Preferred Program will take effect by January 11, 2006.

As part of the 2002 Farm Security and Rural Investment Act, the program establishes a preference for the purchase of bio-based products, including janitorial cleaning products, and applies to all federal agencies. Bio-based products are those that are entirely or significantly composed of biological products or renewable domestic agricultural materials or forestry products.

The purpose of the program is to reduce the country’s dependence on foreign oil, increasing economic development in rural America and increasing the use of products made from environmentally friendly materials.

Each federal agency is creating its own program that will, at a minimum, outline product preferences, create a program to promote those preferences and hold an annual review process to determine the program’s effectiveness.

The program is expected to begin with relatively few companies, but will build as more items are designated.