Target Information

MB Business Capital, a division of MB Financial Bank, N.A., has secured its role as the sole lender and administrative agent for a senior credit facility valued at $10,995,000 for Bastech, LLC, located in Jacksonville, Florida. Established in 1962, Bastech specializes in manufacturing specialty chemicals tailored for the pulp, paper, and phosphate mining sectors. The company’s products serve as key additives in various processes such as deresinating, digesting, defoaming, and flotation, all aimed at improving plant output and overall productivity.

Bastech is currently under the management of C3 Capital and Cave Creek Capital Management, making it a noteworthy portfolio company within their investment strategies. The financing provided by MB Business Capital is intended to refinance existing senior debt and to bolster working capital for future operations.

Industry Overview in Florida

The specialty chemicals industry in Florida is critical to the pulp and paper sectors, which are key contributors to the state’s economy. Florida's extensive natural resources offer a robust base for these industries, which rely on innovation and sustainable practices to remain competitive. Moreover, the phosphate mining industry is particularly significant in the region, driven by both domestic and international demands.

Given the ongoing trends toward environmental sustainability, there is a movement within the specialty chemicals domain to develop eco-friendly additives and solutions. Companies like Bastech, with their specialized products designed to enhance production efficiency, are poised to gain a competitive edge. The market landscape is characterized by a need for continuous innovation and adaptability as industries seek to meet changing regulations and consumer preferences.

Florida's favorable business climate, supported by a skilled workforce and access to funding, has encouraged growth within the specialty chemicals sector. However, the industry also faces challenges, including rising raw material costs and increased competition from international manufacturers. To navigate these challenges, firms must focus on strategic partnerships and investment to sustain growth.

Rationale Behind the Deal

The primary motivation behind MB Business Capital's funding of Bastech lies in the company's established industry position and growth potential. By providing Bastech with the necessary capital, MB Business Capital not only addresses immediate refinancing needs but also positions the company for future expansion in the necessary and evolving specialty chemicals market.

The partnership with experienced investors, C3 Capital and Cave Creek Capital Management, further enhances the attractiveness of this deal. Their knowledge of the market and commitment to fostering substantial growth in their portfolio companies aligns perfectly with Bastech's operational goals.

Information About the Investor

C3 Capital is a Kansas City-based fund management company with an additional office in Phoenix, Arizona, managing approximately $460 million across three funds. Their investments, ranging from $2 million to $15 million, typically take the form of subordinated debt or preferred equity and target businesses poised for later-stage growth and acquisitions. C3 Capital is licensed as a Small Business Investment Company, highlighting its focus on supporting small to medium-sized enterprises.

On the other hand, Cave Creek Capital Management (CCCM), also based in Phoenix, specializes in identifying industry leaders capable of maximizing growth potential. CCCM primarily invests in companies with annual revenues between $15 million and $50 million, primarily in fragmented markets. Their funding strategies incorporate both growth and liquidity, often utilizing a mix of debt and equity to facilitate quicker investment closures.

View of Dealert

Considering the details of this transaction, it appears to be a sound investment opportunity for MB Business Capital. The strategic nature of Bastech's offerings positions it favorably within the specialty chemicals sector, which is poised for steady demand due to its essential roles in various industrial processes.

Furthermore, the backing from C3 Capital and Cave Creek Capital adds credibility to Bastech’s business model and indicates a shared vision for sustainable growth. The expertise these financial partners provide can critically enhance Bastech's operational performance and allow for quicker adaptation to market changes.

Moreover, this investment aligns well with MB Business Capital’s broader portfolio strategy, as it underlines a commitment to fostering growth in sectors that are foundational to Florida’s economy. Therefore, if Bastech capitalizes on this funding effectively, it could lead to considerable returns for the investors involved while also contributing positively to the industry.

View Original Article