Centre Lane Buys Merit Group for $46 Mln

Centre Lane Partners has acquired The Merit Group, a Spartanburg, S.C.-based supplier of paint sundries. Centre Lane is paying $46 million for Merit, which filed a voluntary Chapter 11 petition on May 17, 2011. News of the sale was disclosed by Morgan Joseph TriArtisan which advised Merit in its sale.

PRESS RELEASE

Morgan Joseph TriArtisan LLC’s Financial Restructuring Group was the investment banker for The Merit Group Inc., of Spartanburg, S.C., the leading nationwide supplier of paint sundries, and managed its sale which resulted in the company being bought by the private equity firm of Centre Lane Partners, based in New York City. The Merit Group had filed a voluntary Chapter 11 petition on May 17, 2011.

“With the very capable assistance of the Morgan Joseph team we were able to find a highly suitable partner and emerge from bankruptcy in just 75 days,” said Mitch Jolley, who recently returned as President and CEO of Merit Group. “This speedy and very successful process has enabled us to maintain our position with many of our customers and suppliers, allowing The Merit Group to remain the leading, nation-wide supplier of paint sundries. The swift resolution of the bankruptcy also allowed us to keep intact our very talented people, who are a major asset for us. We also are especially appreciative of having Centre Lane as our new owners, and they are already providing valuable assistance as we move forward.”

“The Merit Group was a textbook example of a good company that had been saddled with a troubled balance sheet and a lack of liquidity. The Company’s history and strong market position resonated with the buyer universe, which enabled our group to move rapidly and identify a suitable purchaser that recognized the company’s intrinsic value,” said Jay Jacquin, a Director in the Financial Restructuring Group. “With Centre Lane’s capital and operational focus, combined with Mitch Jolley’s broad experience, we expect the company to quickly regain its stride and be stronger than ever within a short period of time.”

Merit Group, which at the time of its filing listed total debt of $100 million, including $37 million of unsecured trade debt, was purchased for $46 million.

Members of the Morgan Joseph TriArtisan Financial Restructuring Group that participated in the transaction included James Decker, Managing Director and Head of the Group, Jay Jacquin, James Hadfield and Andrew Joy. Merit’s legal advisor was the McNair Law firm in Columbia, S.C.

About The Merit Group Inc.

The Merit Group, Inc. supplies paints, varnishes, paint brushes, rollers, sprayers, primer, trash bags, adhesives, roller covers, and mixers to the paint and decorating industry. The company was founded in 1977 and is based in Spartanburg, South Carolina. On May 17, 2011, The Merit Group, Inc, along with its affiliates, filed a voluntary petition for reorganization under Chapter 11 in the US Bankruptcy Court for the District of South Carolina.

About Centre Lane Partners

Centre Lane Partners is a private investment firm focused on making debt and equity, control and non-control, investments in North American middle market companies. Centre Lane targets companies with revenues between $20 and $500 million that have leading market positions and sustainable competitive advantages in their respective niches. It seeks to invest $5 to $50 million per transaction. Industries targeted for investment are broad and diverse with no industry excluded from its consideration set.

About Morgan Joseph TriArtisan LLC

Morgan Joseph TriArtisan LLC (www.mjta.com) is an investment bank engaged in providing financial advice, capital raising and private equity investing. The firm’s services include mergers, acquisitions and restructuring advice, in addition to private placements and public offerings of equity and debt, as well as research and trading services for institutional clients.