Continental Graphics was composed of three separate businesses: Datagraphics, a leading provider of customized and specialized technical information to the aviation industry; CFI, which provided film services to the entertainment industry; and commercial printing operations.
At the time of the financing, Continental was over leveraged due to a complex, high rate, capital structure arising from an earlier buyout. We, first, repurchased certain of the debt components at a discount and, then, structured and syndicated a new debt structure to refinance the former.
The revolving credit facility was primarily structured using Continental's working capital assets as collateral while the term loan primarily relied on the enterprise value of Continental's operations.
The several year maturity of the term loan allowed Continental to pursue longer term objectives while the availability under the revolving facility at closing was sufficient for the company to operate through a hypothetical poor cycle that never occurred.
Subsequently, Continental shareholders generated a substantial profit when Datagraphics was sold to Boeing, CFI were sold to Technicolor, and the commercial printing operations were sold to Consolidated Graphics and other buyers.
As Continental Graphics Holdings was focusing on its core competencies of specialized technical information to the aviation industry and film services to the entertainment industry, it decided to consider a divestiture of Arts & Crafts Press and Rush Press.
The independent sale of Arts & Crafts Press and Russ Press separately as well as a sale of both operations together were pursued.
As the process developed, it became evident that Consolidated Graphics (“CGX”) was both the most qualified and highest priced buyer. In addition, CGX had a desire to hire and provide growth opportunities for the management teams of both companies, providing for a smooth transition.
The proceeds from the sale included CGX shares that were sold by Continental Graphics Holdings post-closing to paydown debt and, ultimately, maximize shareholder value.
As Continental Graphics Holdings was focusing on its core competencies of specialized technical information to the aviation industry and film services to the entertainment industry, it decided to consider a divestiture of Franklin Press.
During the sale process, it was determined that a private investor that included management in the ongoing equity interest, offered a transaction at the highest value to Continental Graphics.
The financing consisted of a revolving credit facility and term loan secured by the working capial assets and machinery and equipment, respectively. A separate real estate term loan was raised using Franklin’s property as security.
The equity investment and financing was sufficient to provide ample availability under Franklin Press' revolver to pursue growth opportunities post closing.