by Maureen Flanagan
A consistent innovator and the first company to introduce high-performance polymer-based products known as geogrids to the Americas, The Tensar Corporation plays a vital role in the construction of roadways, parking lots, retaining walls, slopes and coastal protection systems. Tensar's geogrids, engineering design services and application technologies enhance the longevity, durability, and cost-effectiveness of earthworks projects, providing customers with a significant alternative to traditional earth construction methods. Since its founding in 1983, Tensar has applied its geogrid technology in countries throughout the Western Hemisphere and holds numerous patents that protect the company's unique products and proprietary engineered systems.
At a time when billions of dollars are slated for infrastructure development and geogrids are entering mainstream construction markets, Tensar is in a prime position to penetrate existing and new markets. To realize these growth opportunities, KRG Capital Partners, L.L.C., a private equity firm specializing in middle-market investments, purchased Atlantech International, Inc., the holding company that owns The Tensar Corporation and related manufacturing, sales and marketing entities. The acquisition was on completed December 6, 2000.
In support of the acquisition, American Capital Strategies Ltd. (Nasdaq: ACAS) invested $19.75 million in senior subordinated debt and preferred stock. "American Capital's investment helps put our products and systems in a key position as the country builds out its transportation infrastructure," said Atlantech Chief Executive Officer Philip Egan.
Tensar products are used in many different projects conducted by state Departments of Transportation & Environmental Regulation, Port Authorities, Original Equipment Manufacturers (OEMs), and commercial and residential developers. These products strengthen, reinforce, and otherwise provide value enhancing alternatives to traditional construction materials such as aggregates, asphalt, concrete, earth fill, steel or timber. The company's structural geogrids are made of punched polymer sheets stretched in either one or two directions. The final product can have strength characteristics approaching steel. Tensar geogrids can withstand demanding structural applications, such as roadway foundations, retaining walls, slope reinforcements and commercial and residential foundations, where sustained loads will be experienced for up to 100 years or more. Since 1983, over two billion square feet of Tensar BX and UX geogrids have been installed in the Americas. The BX grids alone would support six-lane interstate highways stretching from Atlanta to Los Angeles, Atlanta to Denver and Atlanta to Chicago.
Headquartered in Atlanta, Georgia, Tensar was originally formed in 1983 as a joint venture between Netlon Limited, inventor of the geogrid technology, and Gulf Canada. Over the years, the company continued to develop the technology with new patents, engineering designs and application technologies. The company's ability to deliver customers a complete package -- from site appraisal and design to project completion -- sets it apart from the competition.
"Tensar's forward-looking management team, industry knowledge, and focus on new product development and innovation make this company an excellent investment for American Capital," said American Capital Principal Darin Winn. "Companies like Tensar serve as a critical component in the nation's infrastructure development by bringing new products, technologies and strategies into the marketplace. We are proud to be part of this effort."
American Capital's investment in Tensar included $18.75 million in senior subordinated debt and $1.00 million of preferred stock. American International Group (AIG) also provided subordinated debt financing. Tensar now joins American Capital's diversified portfolio of companies, many of them market leaders and innovators in a wide range of industries.
The Tensar transaction is ACAS' third investment partnering with KRG. American Capital also provided financing for Transcore Holdings, Inc. and Case Logic, Inc. "We are pleased to be working again with KRG, a firm with a solid track record of realizing the full potential of profitable, cutting-edge companies like Tensar," Winn said.
ACAS' investment in Tensar comes at a time when the market for public construction is strong and growing. TEA-21 (Transportation Equity Act for the 21st century), a $217 billion highway construction program, stimulates the market for companies in the soil reinforcement industry. Another related legislative initiative, FAIR-21, (Ford Aviation Investment Reform Act for the 21st Century) launches a $12 billion airport improvement program. By virtue of involvement in airport improvement products, Tensar is well positioned to take advantage of this increased funding.
In addition to increased industry-engineering community acceptance are the proven economical reasons for using geogrids to reduce construction costs. One independent government study concluded that geogrids used in conjunction with aggregate lowered the aggregate requirement on a soft clay base from 20 inches to 10 inches, reducing construction costs by approximately 30%.
Building on its solid foundation, Tensar continues to increase revenues, cash flow and market share. The company's management continues to develop profitable application methodologies such as new transportation & industrial foundation systems that dramatically reduce the overall cost of construction. The company is also focused on internal and manufacturing efficiencies, continually striving to eliminate waste and optimize processes.
The sale to KRG will enable Tensar to continue its growth and realize additional market opportunities. With its patented technology and innovative, diverse industry applications, Tensar will play a key role in enhancing the infrastructure in countries throughout the world.
