Tennenbaum puts $120m in packaging

Santa Monica-based Tennenbaum Capital made a $120m capital infusion into Pennsylvania-based foodservice packaging company Radnor Holdings, investing in the company’s debt and equity.

Tennenbaum Capital has invested $120 million (€102 million) into foodservice packaging outfit Radnor Holdings, based in Pennsylvania.

The investment, according to a statement issued by Tennenbaum, takes the form of preferred equity, warrants and secured debt, and makes the firm the largest investor in the company. As part of the capital infusion, Tennenbaum will get one representative to occupy a seat on the company’s board, which will be filled by José Feliciano, a partner at the firm.

The deal comes during a difficult stretch for Radnor which, along with many others in the space, has had to cope with rising commodity prices. The company, according to its latest quarterly report, has seen its net sales increase by over 10 percent to $359 million during the nine months ended September 30. During the same period, however, the company reported a 13 percent slump in its gross profits.

Regarding the investment, Tennenbaum founder and senior managing partner Michael Tennenbaum said the new capital would allow Radnor to “expand its business during a period when the entire packaging industry faces a very difficult raw material and energy cost environment”.

Most of the proceeds of the investment, $95 million, will be used by Radnor to refinance its debt and redeem its senior secured floating rate notes due 2009. Additional funding will be used to capitalise new product rollouts.

Last year, Tennenbaum raised $2 billion in capital for The Special Value Opportunities Fund. The firm focuses on special situations and will pursue investments in all areas of the capital structure, including equity, bank debt, distressed debt and mezzanine tranches.

The Radnor investment closely follows Tennenbaum’s announced $386 million acquisition of communications products maker Enterasys Networks. The Gores Group was a co-investor in that transaction.