For weeks, the sale or closure of Wausau Paper’s Rhinelander mill has been on the minds of the community. However, getting executives to talk about the future of the mill is a tough proposition and this week they were once again issuing a “no comment” to inquiries regarding KPS Capital Partners of New York purchasing the Wausau Paper mills in Rhinelander and Mosinee. Officials at KPS also issued a “no comment” when asked about purchasing the longtime Rhinelander manufacturing plant.
If, in fact, KPS is going to purchase the mill, their website paints a picture of hope. That’s what Waupaca Foundry got when KPS took them over almost a year ago. “Everything turned out very good for that company,” said Terri Schulz, Waupaca Area Chamber of Commerce president. “They came in and retrained the management staff and even hired more employees.”
Another move KPS made was to change the foundry company’s name back to its original title after it became ThyssenKrupp. “Changing the name back to Waupaca Foundry meant a lot to the community and the workers,” said Schulz.
There are three foundry companies within Waupaca, all under the Waupaca Foundry name. The company employs about 1,600 workers. “It would have devastated this area if those foundries would have closed,” said Schulz. “Having KPS come in worked very well for us.”
KPS Capital Partners is based in Manhattan and is a private equity firm that already has holdings in the paper industry. Their website reports they target “orphan” businesses of larger corporations that would benefit from new ownership, including divestitures, spin-offs or carve-outs. “We invest our capital based on our ability to effect material improvement in an orphan’s profitability through the implementation of a new business strategy, cost reduction and capital investment. We have successfully created new companies to purchase the assets of orphan businesses in successful divestiture transactions,” the KPS website explains.
Mike Psaros is the “P” in KPS and started the company with two other investors in 1991. On the KPS website is an interview from a 2009 Financial Times magazine in which Psaros relates a story about how the mill his father worked at in West Virginia was struggling. There was an employee-ownership buyout at that mill which impressed Psaros so much that he decided to pursue financing as a career. In addition to Psaros, the “K” in KPS is represented by Eugene Keilen, a former banker and a senior advisor for KPS, and David Shapiro, who is a co-founder and managing partner of the firm.
According to the KPS website, the firm readily admits it likes to deal with companies that have unions. In fact, the company finds many of its deals through union representatives who contact KPS when a factory, mill or other manufacturing plant is struggling. Unions also appreciate the fact that KPS uses very little debt in its deals.
The company knows how to raise money for its transactions. In 1997 it raised $200 million which, back then, was one of the biggest debuts ever by a private equity fund. In addition to Waupaca Foundry, KPS has also restructured such companies as Wedgewood, Waterford Crystal, International Equipment Solutions, Global Brass and Copper, United Copper Industries, Chassis Brakes International and Motor Coach Industries.