A month later, Gallman’s phone rang again. The deal with the other
buyer had not panned out. Noelting was prepared to sell the plant to
Gallman, but he only had 45 days to put the deal together because Noelting
needed the money to pay for another venture. The local investors were still
on board, but Gallman had to ask MB to provide the debt financing.
“MB rose to the challenge,” Gallman says. “We were on the clock, and
MB stepped up. John Curtis was the initial contact. Then we had Jerry
Kelliher from Kansas City. They all got together and completed this deal
on a tight timeline.”
“They took us on, and there were no hard feelings over the stopping
and starting. They believed in us, and they delivered,” Gallman adds.
“At the end of the day, Greg got back in the driver’s seat and put the
money together,” Curtis says. “Our team provided the majority of the debt
financing to help them complete the deal.”
Since MB had already completed part of the due diligence a few months
earlier, the team only had to do a bit more and go through the credit
approval process. The transaction closed April 28, 2017.
“Greg was the general manager,” Curtis says. “He was the natural fit
to be the successor. The seller just had to run his course. There were a few
challenges. One was the length of time to close the transaction. Also they
were part of a parent company based in Alabama. And the underwriting
was a challenge because this was a new entity.”
Part of the company was sold to a German buyer, which added
another complication to the mix. “We all had to close at the same time,”
In the end, MB provided a $1.8 million term loan to buy equipment
and a $33 million revolving line of credit.
Curtis points out that the MB team members were not novices at
pulling rabbits out of hats: “This team has been together for over 20 years.
There is a real strength that we have as an organization. We can take
situations like this and structure the lending so it provides the borrowers
with what they need.”
The company has dropped the Wolverine name and emerged as
Shawnee Tubing Solutions. The company is also dropping its technical
tubing line, which Gellman says is mainly produced in China and is too
labor intensive to manufacture, and re-introducing water tubing while
expanding into new markets.
Gallman is proud of the 18 Shawnee community members who
invested in the company and the five local banks that purchased the
building and rented it back to the company. For Gallman and his Shawnee
partners, this was more than a business deal that saved 500 jobs —
although that was of vital importance. Saving the factory was a victory
for the entire Shawnee community. abfj
NADINE BONNER is editor of ABF Journal.
Wolverine Changed Owners
In 2008, a group of Canadian investors purchased the London facility
and changed the name to Great Lakes Copper. The U.S.-based plants
retained the Wolverine name. According to Gallman, the Canadian
investors had no ties to the Oklahoma community.
But it was still a shock when members of the company’s board of
directors approached Gallman last summer and told him they would be
selling the Oklahoma and Alabama plants. For Gallman, the news was
especially devastating. In addition to serving as CFO for Wolverine,
he was a member of Shawnee’s economic development committee,
charged with bringing business into the community.
Over the years, Gallman had developed a relationship with Great
Lakes Copper CEO Jean Noelting, who offered him first right of refusal
to purchase the plant before putting it on the market. Gallman was
galvanized into action by the possibility of keeping the factory alive,
and he immediately began trying to raise the financing to complete the
transaction. Gallman consulted with Tim Burg, executive director of
the Shawnee Economic Redevelopment Foundation, who agreed that
keeping the plant open was a top priority. They also wanted to keep the
financing local, but this proved to be a daunting task.
Deal Too Large for Local Banks
“Even [if] all the local banks came together, this was a project too big
for the Shawnee bankers,” Gallman recalls.
Last summer, the pair approached WayPoint Capital Partners, a
family office-affiliated private equity firm, to help find a lender and
equity partners. It was an eye-opening experience.
“We found out very quickly that private equity sponsors wanted an
outrageous amount of equity in return,” says Gallman. “Some wanted
95%, and we weren’t willing to give that up.”
So Gallman renewed his efforts to raise the funds in Shawnee, and
he enjoyed some success. He found 18 residents who were willing to
invest in the company.
“We had lawyers, bank presidents, optometrists — they all rallied
behind us to keep the jobs here,” Gallman recalls. But still, it was not
enough to purchase the plant.
They also started looking for lenders that could provide an asset-based loan, an ideal choice for a company like Shawnee with heavy
machinery and a valuable product.
MB Business Capital Makes a Bid
“MB Business Capital rose to the top immediately,” Gallman says.
“They got out and hustled and worked to win the account. They were
very meticulous. They were also the first to get the data back to us.”
To Gallman, MB also felt more like a local business, since it was
based in Chicago with strong Midwestern roots. Gallman was born
and raised in Chicago, although he is now one of Shawnee’s strongest
boosters. John Curtis, MB group president for the Southwest region is
based in Oklahoma City.
Like MB, New York-headquartered WayPoint has an outpost in
Tulsa, OK, and Curtis had worked with Waypoint’s Jim Holder on
many transactions over the years. MB was approached in October
2016 and submitted a proposal in November.
But in January 2017 the unexpected happened. “The rug was
pulled out from under me,” Gallman recalls. Noelting called to say
another offer had come in, and he was not going to close the deal with
the group in Shawnee. It was a blow to Gallman and his team, who had
worked so hard to put together the financing, but they had no options.
It was Noelting’s company.
“This team has been together for over 20 years. There is a real strength that we have as an organization. We can take
situations like this and structure the lending so it provides the
borrowers with what they need.”
— John Curtis, Group President for the Southwest, MB Business Capital