Bayside Capital Inc., a Miami-based investment group, has taken a controlling interest in Milacron Inc., by purchasing a stake from Glencore Finance AG, the Swiss raw materials conglomerate that funded Milacron's pivotal debt refinancing in 2004.
One analyst who covers Milacron said the new investor will take a more active role in Milacron than Glencore.
Milacron, which is traded on the New York Stock Exchange as MZ, announced Oct. 3 that its board of directors approved the deal. Terms were not immediately disclosed. Bayside is buying all of Glencore's Series B preferred shares.
With more than $500 million in capital from institutional investors, Bayside focuses on middle-market companies. Bayside is part of H.I.G. Capital LLC, a private equity firm with more than $4 billion of equity capital under management, again, mainly in small to midsized companies.
Bayside will control shares totaling about 29 percent of voting power in Milacron, according to a spokesman for the Cincinnati-based maker of injection molding machines, extruders, blow molding machines and mold components.
But the real clout comes because by taking the Series B shares, Bayside has the right to name seven members to Milacron's board of directors - a majority of the 13 total directors.
In the Oct. 3 announcement, Milacron said the board of directors has approved four Bayside representatives to the board: John Bolduc, John Caple, Tiffany Kosch and Lewis Schoenwetter.
The four Bayside members replace four of Glencore's Series B directors, who have resigned. Glencore still has three other people on the Milacron board, including Steven Isaacs, Glencore's chairman and managing director.
Bolduc is managing director of Bayside Capital. In a statement, he said Milacron ``has an experienced management team, leading market position and is well-positioned to take advantage of the opportunities in its markets.''
Milacron Chairman, President and Chief Executive Officer Ronald Brown said Bayside ``has an excellent reputation and a proven track record of successful investment in industrial companies.''
Bolduc and Brown could not be immediately reached for additional comment.
Even though Glencore controlled a majority of the board, ``Glencore was a more-passive investor more focused on metals and mining,'' said financial analyst Eli Lustgarten, who covers Milacron at Longbow Research of Independence, Ohio.
Lustgarten said Bayside Capital ``will probably be more hands-on,'' which will be good for Milacron as it struggles to return to profitability after six straight money-losing years.
Bayside's Web site says the firm ``actively seeks to partner with owners and managers of companies to grow businesses and create long-term value'' and combines capital from institutional investors with Bayside's own ``in-house operational expertise.''
In recent transactions, Bayside lists a wide range of deals, including an industrial filtration company, a European maker of retail displays, an air cargo carrier, an eyewear company and an Indianapolis supermarket chain. One plastics business sticks out: SciTech Plastics Group, an injection molding company based in West Brookfield, Mass.
Based in Baar, Switzerland, Glencore is a huge multinational corporation with more than $100 billion in sales and holdings in oil and coal, metals mining and refining and agricultural commodities.
Glencore played a key role in early 2004, when Milacron faced a financial crisis and possible bankruptcy as the clock ticked down on bonds coming due. Glencore and Mizuho International plc, a big Japanese bank, teamed to make a $100 million investment. Milacron used the convertible bonds to refinance the debt, and Glencore and Mizuho got a major equity ownership in the machinery manufacturer, through the Series B preferred stock. Mizuho later sold its shares.
Brown told the Cincinnati Business Courier that Bayside has been in talks for about a year with Milacron and Glencore. Brown told the newspaper that Glencore lost money on its investment over the three years, but he did not give a specific amount.