Oil & Gas Financing

Circuit board manufacturer completes buyout of owner

Hybrid Design Associates, LLC is a Tempe, Arizona-based manufacturer of integrated circuit boards used primarily in the oil and gas drilling industries. In the fall of 2008, the owner, who was retiring and seeking additional liquidity in his personal estate, was seeking to sell the company. For a variety of reasons, including a significant decline in commodity prices that year and the general uncertainty prevailing in the credit markets, the company was unable to secure an acceptable transaction.

Despite the difficult lending climate, Prudential Capital Group continued to work toward a solution, drawing on its experience in both the integrated circuit board and energy industries and its broad network of capital partners. By the fall of 2010, Prudential Capital and the management team had identified an equity investor willing to partner on a deal.

The creatively structured transaction called for Prudential Capital to provide a $4 million revolving line of credit and an $11 million term loan. Prudential Capital Partners, an affiliate of Prudential Capital Group, would contribute $8 million of subordinated debt and $3.8 million of preferred equity. Finally, LLM Capital LLC, a private-equity firm with offices in Boston and San Francisco, would make an additional preferred equity investment of $8 million. The transaction closed on January 7, 2011.

In a challenging economic environment, Hybrid Design Associates counted on Prudential Capital for its financing needs, certain of Prudential Capital’s ability to execute the transaction given its industry experience, network of capital partners and creative deal-structuring capabilities.