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Huron Capital Doubles Size of Specialty Chemicals Platform Company

Published on 2006-08-08. Author : SpecialChem

DETROIT -- Huron Capital Partners LLC announced that its portfolio company, Quest Specialty Chemicals, Inc. ("Quest"), has recapitalized Matrix System Automotive Finishes, Inc. ("Matrix" or the "Company") in partnership with Matrix' management and combined the business with Quest's wholly-owned subsidiary, Raabe Company LLC ("Raabe"). Founded in 1983, Matrix is the largest independent supplier of automotive aftermarket refinish coatings in the United States and has developed an extensive product line of acrylic and polyurethane coatings for the high performance requirements specified in automotive finishes. These include a complete intermix paint system capable of matching over 60,000 automotive colors, clearcoats, primers, hardeners and single stage top coats. Based in Walled Lake, Michigan, the Company supplies paint products to automotive refinish paint distributors across the entire U.S. for sale to collision repair shops. Mr. W. Kent Gardner, Founder and President of Matrix, will continue to serve as the President of the Company and has been appointed to the Board of Directors of Quest.

In 2003, Huron formed a strategic market entry initiative with specialty chemical industry executives Frederick Quinn and Gerry Loftus and long-time chemical industry investor Carol Bramson. In 2004, Huron invested a significant amount of equity in Quest to acquire Raabe as part of a buy-and- build acquisition strategy in the specialty coatings markets. Since acquiring Raabe, Quest has been exploring acquisition opportunities in the coatings, adhesives & sealants and films markets, which resulted in the 2005 acquisition of Foxcolor, Inc. The Foxcolor acquisition provided an extension of Raabe's market penetration with ready-to-apply custom match touch-up paints that closely match original equipment coatings and are used to repair the surfaces of industrial and commercial products along all points of the supply chain.

Commenting on the Matrix transaction, Michael R. Beauregard, a partner at Huron, stated, "The Matrix deal comes on the heels of Quest's purchase of Raabe and Foxcolor and significantly strengthens Quest's initiatives in niche specialty performance coatings. The collision repair marketplace served by Matrix is large and highly fragmented, with approximately 50,000 repair facilities in the United States alone. We expect to offer these end-users unique product solutions and make additional synergistic acquisitions for Quest, Raabe and Matrix in the future to continue building an integrated coatings, adhesives and films provider."

Mr. Quinn, Quest CEO, added, "We are thrilled to have Kent Gardner and his team join us in building the vision for Quest. We believe that the combination of Raabe and Matrix will enhance both businesses' product offerings. Quest's combined technologies are now transferable into many complimentary markets and our products can be cross-promoted to solve supply chain inefficiencies by consolidating our customers' supply sources." Mr. Gardner, Matrix President, commented, "I was attracted to the strategic and operating talent that Fred and Gerry will bring to the Matrix organization. With Quest and Raabe, we will be able to expand our product lines to include aerosols and build our market offering. With the financial strength of Huron Capital and the firm's value-added operations-oriented approach, we will be able to grow our company organically and through acquisitions."

Huron Capital and Quest were represented by Honigman, Miller, Schwartz and Cohn (Detroit). Quest's existing lenders, Marshall & Ilsley M&I Bank (Milwaukee) and BMO Mezzanine Fund (Chicago), provided financing for the Matrix transaction. Huron separately announced that Raabe completed a sale and leaseback transaction in June involving Raabe's plant in Menomonee Falls, Wisconsin, with Gladstone Commercial Limited Partnership.

About Huron Capital Partners LLC

Huron Capital is a leading private equity firm investing in lower middle- market companies. The firm typically invests between $5 million and $20 million in equity to sponsor management buyouts, recapitalizations, and corporate spin-offs of well-positioned companies having revenues up to $200 million. Through its operational approach, Huron's strategy is to partner with strong management teams at niche manufacturing, specialty service, and value- added distribution companies that can be built through acquisition and organic growth.

Huron Capital manages over $250 million through two private equity funds, The Huron Fund, L.P. ($72 million, 2000) and The Huron Fund II, L.P. ($185 million, 2005). Since its founding in 1999, Huron has acquired or invested in 23 companies and has generated a realized IRR exceeding 65% for its Limited Partners. In 2006, Huron sold York Label in a transaction that generated 5.0 times its original investment and an 83% IRR and sold Delta Educational Systems in a transaction that generated 11.7 times its original investment and an 85% IRR. Huron has committed over 45% of its latest fund and is aggressively seeking new investment opportunities.

About Quest Specialty Chemicals

Quest is led by Messrs. Quinn and Loftus, veterans in the specialty chemical industry who have successfully built, acquired and divested businesses in the specialty chemical industry. The mission of Quest is to acquire and build specialty chemical companies who are engaged in the formulation of coatings, adhesive and sealant products which are designed to provide surface protection to or the bonding of, flexible and rigid substrates. Quest seeks enterprises whose core competencies and drive are based on differentiated and defensible product technology in combination with a market niche strategy focus.

Source: Huron Capital Partners LLC

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