Hallcon sale to produce 34% IRR for Southfield Capital

Southfield Capital said Tuesday that it closed the sale of Hallcon Corp. to Novacap. Toronto-based Hallcon provides specialty outsourced services primarily to the railway, transit and oil and gas sectors in North America. This sale resulted in a gross return to Southfield of 3.3x and 34 percent IRR; after its expected earn out the return for Southfield should rise to 3.6x and 37 percent IRR on a pure operating basis, a source said. Lazard acted as lead financial advisor and BB&T Capital Markets acted as co-financial advisor to Hallcon.

PRESS RELEASE

GREENWICH, CT – Southfield Capital, a leading lower middle market private equity firm, announced
today that it completed the sale of Hallcon Corporation (“Hallcon”) to NOVACAP. Hallcon is a leading
provider of specialty outsourced services primarily to the railway, transit and oil and gas sectors in North
America, based in Toronto.
Southfield Capital acquired Hallcon in 2011 in partnership with the senior management team. During
Southfield Capital’s investment, Hallcon’s EBITDA increased by four times. This extraordinary growth
was primarily driven through geographic expansion into the U.S., the introduction of complementary
service offerings and strategic acquisitions. The sale of Hallcon represents a very successful exit for
Southfield’s investors and the management shareholders.
Heb James, a Partner with Southfield Capital, commented on the sale, “Working with the Hallcon team
over the past four years has been a real pleasure. Because of the strong leadership and commitment to
growth at Hallcon, we were able to execute on the highly ambitious goal of taking a business that was
primarily hauling rail crew members in Canada, and expanding it to become a leading provider of
outsourced employee transportation throughout North America. I’m proud of what we collectively
accomplished and wish the Hallcon team the best as they continue to grow the business.”
The acquirer, NOVACAP, is a Montreal-based private equity firm focused on investing in middle market
businesses in traditional industries.
Lazard acted as lead financial advisor and BB&T Capital Markets acted as co-financial advisor to Hallcon.
Finn Dixon & Herling and Stikeman Elliott acted as legal advisors to Hallcon.
About Hallcon
With corporate offices in Toronto, Ontario and Lenexa, Kansas, Hallcon provides comprehensive
outsourced solutions for rail, oil and gas, mining, airline and commuter employee transportation. In
addition to employee transportation, Hallcon provides passenger rail coach, bus and train station
cleaning and maintenance services to municipal, regional, and national passenger rail and transit
providers. More information on Hallcon can be found at www.hallconcorp.com.
About Southfield Capital
Southfield Capital is a private equity firm that invests in exceptional, growing companies in the lower
middle market. The firm makes control investments in North American companies generating $4 – 12
million in EBITDA with proven business models, attractive growth and profitability trends, and strong
leadership. For more information, please visit www.southfieldcapital.com.