Hawthorne Partners Rolls With Tire Equipment Co. –

Hoping to find profit where the rubber meets the road, Hawthorne Partners LLC this month acquired RMS Corp., a manufacturer of tire-making equipment and other rubber-molding equipment.

Terms of the deal were not disclosed, but Michael McGath, a managing director at Hawthorne, said his firm usually puts approximately $7 million in equity into deals. RMS, based in Kitchener, Ontario, has annual revenue of approximately $35 million. The company’s clients include The Goodyear Tire & Rubber Co., Michelin, and various foreign tire makers.

One of RMS’s two sellers opted to stay on as a minority equity investor in the transaction. The company was founded in 1917.

The manufacturing sector is familiar terrain for Hawthorne. The firm in April acquired Victoreen, a Brownsville, Texas-based manufacturer of power resistors, adding it on to Hawthorne’s Skokie, Ill.-based electrical component platform Ohmite Manufacturing Co.

Hawthorne’s Ohmite in March also acquired C.T. Gamble, based in Delanco, New Jersey. C.T. Gamble has an off-shore manufacturing facility in Barbados, which will help lower the company’s cost of production, according to Thomas Pearson, a managing director at Hawthorne.

Financing for both deals was provided by NationsCredit Commercial Corp., with LaSalle National Bank joining in to provide debt for Victoreen.

Hawthorne, based in Chicago, was founded by former Bank of America structured finance professionals. The firm’s sole limited partner is The Heico Companies LLC, a holding company founded by Michael Heisley, the third managing director.

Hawthorne draws its capital from the cash flow of Heico Companies, which had 1998 revenue of approximately $1.4 billion.

Last year, the firm halted fund raising on a $300 million buyout fund, citing internal problems and difficulties associated with first-time funds (BUYOUTS April 6, 1998, p.12). McGath said Hawthorne now is looking for co-investors interesting in committing between $3 million and $5 million on a deal-by-deal basis.