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By Maureen Flanagan
Soff-Cut International, Inc., based in Corona, CA, is a leading designer and manufacturer of concrete saws for commercial and residential construction. The company's Ultra Early Entry™ technology, developed in 1987, revolutionized the concrete industry, enabling contractors to cut control joints one to two hours after concrete is poured, thereby minimizing the incidence of random cracking. Offering the broadest line of sawing products in the industry, Soff-Cut has gained a leading share of the commercial concrete saw market.
In an August 23 transaction, Soff-Cut's owner, Westar Capital, LLC, a private equity fund based in Southern California, recapitalized the company to refinance its current debt and other obligations. To support the recapitalization, American Capital Strategies, Ltd. (Nasdaq: ACAS) provided a $25 million financing package.
"As the first saw that provides a remarkably high success rate in cutting concrete without cracking, Soff-Cut's commercial line is known throughout the industry for superior performance," said Don Hinshaw, the company's President and CEO. "With our technology now available for residential construction, we are positioned to meet the demand and opportunity of this new market."
Soff-Cut's patented Ultra Early Entry™ technology, developed by the company's founder Edward Chiuminatta, makes the pouring and finishing of concrete more efficient and economical. By cutting concrete shortly after the finishing process and before final setting, the technology prevents the cracking that will occur when concrete sets for the standard 24 to 40 hours. Contractors save time and money by not having to return to a job to cut a slab days after it is poured; they are also not faced with costly replacement if a slab is flawed. The saw is widely used for commercial flatwork construction including floors, driveways, slabs on grades and sidewalks.
In 2002 Soff-Cut introduced the Prowler X-150 - the first fully functional Ultra Early Entry™ saw for residential and small commercial construction. This product offers the same patented sawing system at a lower cost.
In addition to saws, the company sells a complete line of diamond blades and accessories, offering the broadest line of concrete sawing products in the industry. Soff-Cut products are differentiated by their horse-power, cutting depth and user functionality (i.e. automatic versus manual controls).
The company distributes its products through construction equipment dealers in both the U.S. and internationally and holds 26 U.S. patents and 21 international patents related to its products.
"Though the commercial construction market declined over 30% from 2000-2003, Soff-Cut was able to increase revenue and EBITDA by introducing new products, entering new markets and expanding distribution," said Frank Do, American Capital Principal. In the August 2004 recapitalization, American Capital provided a revolving credit facility in addition to a senior term loan and junior and senior subordinated debt financing. Since 1997 American Capital has provided more than $3.3 billion in middle-market investments and manages a current portfolio of more than 100 companies.
For more information about American Capital's portfolio click here. The $6.7 billion market for construction equipment is forecast to increase 8.6% in 2004, driven by the improving economy and increased construction spending. The company's new suite of products for the residential construction market is expected to be supported by continued demand for new home construction.
With strong leadership, new products and markets, and a resurgence in its markets, Soff-Cut has excellent opportunities for future profits.
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