Capstone Headwaters advises Vigor Industrial on its Acquisition by The Carlyle Group to merge with MHI Holdings

Capstone Headwaters advised Vigor Industrial (“Vigor”) on its acquisition by The Carlyle Group and Stellex Capital Management (“Stellex Capital”).  At closing, Vigor merged with Stellex Capital portfolio company MHI Holdings (“MHI”), a ship repair and maintenance services provider based in Norfolk, Virginia.  The combination creates a bicoastal leader in critical ship repair services and defense-related fabrication.  Stellex Capital contributed new equity to the combined company.  Other terms of the deal were not disclosed.

Vigor Industrial is a provider of complex fabrication and ship repair services.  It operates eight drydocks across the Pacific Northwest and Alaska, including the largest floating drydock in North America.  Vigor excels at ship repair, specialized shipbuilding, and other complex fabrication projects, in support of aerospace, defense, and infrastructure end markets. 

The Carlyle Group, founded in 1987 and based in Washington D.C., is a global investment firm that originates, structures and acts as a lead equity and debt investor in leveraged buyouts, management-led buyouts, strategic minority equity investments, equity private placements, consolidations, buildups, and growth capital financing. The firm focuses on a wide range of sectors which includes aerospace and defense, automotive and transportation, consumer and retail, energy and power, healthcare, and more.

Stellex Capital is a private equity manager that invests in and oversees U.S. and European corporate assets.  With $870 million of committed capital, Stellex’s focus is on companies going through business or industry transitions, as well as special situation opportunities.  Stellex seeks to identify and deploy capital in opportunities that have the potential to provide stability, improvement, and growth.  Sectors of particular focus include specialty manufacturing, industrial and business services, aerospace & defense, and government services.

Frank Foti, Former Chairman, CEO, and President of Vigor Industrial, stated 

“Rarely do you have the pleasure of working with a diverse team of dedicated, honest, and hard-working individuals with the sophistication of a big bank and none of the ego. Throughout the process, Vigor felt supported and well-represented, which helped focus my thinking and emotions as a seller. The Capstone Headwaters bankers became a cohesive team with the key leaders at Vigor in a way that feels uncommon for a banker-client relationship. Long term relationships have been born out of this deal, and I wasn't expecting that. Ultimately, the team found the kind of buyer that was appropriate for the growth path of the business.” Foti will serve on the Board of Directors for the combined company.

Phil Seefried, President of Capstone Headwaters, commented 

“Vigor, under the leadership of Frank Foti, created a special values-driven work environment that served as the foundation for the company’s success. Being part of the Vigor team was a powerful experience for all of us at Capstone Headwaters.  We are very excited about the future for the Vigor team.”

Burke Smith, Managing Director of Capstone Headwaters, added

“Through a series of strategic acquisitions, Vigor created a true market leader in the Pacific Northwest.  Now, in keeping with its core focus on Evolution, Vigor has leapfrogged fully onto the national stage as a bicoastal marine services and specialty fabrication company supported by premier private equity partners.”