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Wesray Capital Corporation

wesray capital corporation
Wesray Capital Corporation was an early private equity firm focusing on leveraged buyout investments The firm was founded by former US Secretary of the Treasury William E Simon and former New Jersey Nets owner Ray Chambers

The firm is known for its 1982 investment in Gibson Greetings as well as for its involvement in seeding other notable private equity firms in the 1990s including Vestar Capital Partners and Catterton Partners

The firm was based in New York City

Contents

  • 1 History
  • 2 Involvement with other private equity firms
  • 3 See also
  • 4 References

Historyedit

Wesray was formed in September 1981 by William E Simon, Ray Chambers, and Frank E Walsh, Jr The new partners, who had met earlier that year, named their new business for themselves; with the exception of Walsh The "WES" in the firm's name represented Simon's initials and "RAY" was for Chamber's first name12 Before forming Wesray, they had collaborated in the acquisition of a few small companies, including Tactec Systems, the mobile communications division of RCA; Long Island Oyster Farms; and Mobile Music Man, a business that specialized in the rental of school musical instruments1

In January 1982, Simon, Chambers, and a group of other investors acquired Gibson Greetings, a producer of greeting cards The purchase price for Gibson was $80 million, of which only $1 million was rumored to have been contributed by the investors $330,000 each By mid-1983, just sixteen months after the original deal, Gibson completed a $290 million IPO and both Simon and Chambers made approximately $70 million each34 About a year after the Gibson Greetings purchase, Wesray acquired Heekin Can from Sir James Goldsmith through a complex leveraged buyout transaction in which almost all of the purchase price of the company was obtained through Heekin's own cash reserves, loans and credit lines against Heekin's assets, and a sale-and-leaseback arrangement for Heekin's facilities5 In his autobiography, Simon said that Wesray contributed only one million dollars to buy a company worth $829 million,1 while the International Directory of Company Histories reports Wesray's contribution as only $250,000 and the total purchase price as $1088 million5 When Heekin went public through a stock offering in 1985, Wesray realized a profit of $28 million from the sale of its Heekin holdings1 Simon and Wesray would later complete the $716 million acquisition of Atlas Van Lines In all, between 1981 and 1984 Wesray acquired 14 companies that Simon described in his autobiography as "mostly little known", later selling them for what he described as "incredible profits"1 The success of the Gibson Greetings investment attracted the attention of the wider media to the nascent boom in leveraged buyouts

After Simon ended his active involvement in the firm's management, Chambers was responsible for deals including the 1985 purchase of Avis Rent a Car System, which was sold 14 months later to an employee stock ownership plan for $175 billion along with the sale of other Avis assets for $674 million, netting a profit of $740 million on a $10 million capital outlay6 Other investments include Simmons Co,7 RKO Pictures, Simplicity Patterns,8 Six Flags, Ally & Gargano, Western Auto,9 and The Outlet Company

Involvement with other private equity firmsedit

Wesray and Chambers were early investors in buyout firm Vestar Capital Partners, investing in the first Vestar fund in 198810 John D Howard, who had been a senior vice president and partner at Wesray would become co-CEO of Vestar and later CEO of Bear Stearns Merchant Banking Irving Place Capital

In 1990, the founders of Catterton Partners, Frank Vest, Michael Chu and Scott Dahnke, partnered with former US Secretary of the Treasury William E Simon to form what was then known as Catterton-Simon Partners

In addition Wesray Capital took over The William Carter Company of Needham Ma, in June 1988 for the sum of $115 million

See alsoedit

  • W P Carey & Co

Referencesedit

  1. ^ a b c d e William E Simon, with John E Caher, A Time for Reflection: An Autobiography, Regnery Publishing, 2004 352 pages ISBN 0-89526-170-7, ISBN 978-0-89526-170-0 Pages 225-231
  2. ^ Worthy, Ford S "WES THREATENS TO PULL OUT OF WESRAY", Fortune magazine, July 21, 1986 Accessed September 10, 2008
  3. ^ Taylor, Alexander L "Buyout Binge" TIME magazine, Jul 16, 1984
  4. ^ Davis, L J "WILLIAM SIMON'S FACIFIC OVERTURES", The New York Times, December 27, 1987 Accessed September 11, 2008
  5. ^ a b Heekin Can Inc, International Directory of Company Histories, Vol 13 St James Press, 1996 Retrieved from Funding Universe website, November 27, 2009
  6. ^ "Sans Simon, Wesray cleans up on Avis", Fortune magazine, October 26, 1987 Accessed September 11, 2008
  7. ^ http://wwwbusinessweekcom/stories/1991-12-08/nobody-is-resting-easy-at-simmons
  8. ^ Hylton, Richard September 2, 1989 "A Pattern Maker's Buyout Burden" New York Times 
  9. ^ "Western Auto Sets Buyout" Chicago Tribune June 8, 1985 Retrieved April 4, 2012 
  10. ^ Vestar Capital Nears Blockbuster Final Close Buyouts, November 8, 1999

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