Hanover Partners Buys Handi Quilter

Hanover Partners has acquired Handi Quilter LLC, a North Salt Lake City-based maker of branded quilting machines, portable frames/tables, computerized quilting systems and quilting accessories. Tuckerman Capital provided leveraged financing, while Handi Quilter senior management also participated. No pricing terms were disclosed.

PRESS RELEASE

Hanover Partners, Inc. announced the purchase of Handi Quilter, LLC of North Salt Lake City,

Utah a leading and innovative manufacturer of branded quilting machines, portable

frames/tables, computerized quilting systems, and quilting accessories. Handi Quilter’s products are primarily used in the home by dedicated quilting enthusiasts as well as by quilters with home based businesses. Since the Company’s founding in 1999, it has consistently introduced new products, entered new markets, and delivered exceptional quality and service. With nearly 50 employees, Handi Quilter has experienced 70% growth in the last two years and has rapidly become one of the largest long-arm quilting machine manufacturers in the country. Based in San Francisco, California and Portland, Oregon, Hanover Partners completed the transaction with financing largely provided by Tuckerman Capital III, LP of Hanover, New Hampshire. Handi Quilter is the ninth investment partnership between Hanover and Tuckerman.

A significant re-investment was also made in the transaction by the Company’s CEO, Mark

Hyland and COO & CFO, Darren Denning, both of whom will remain with the Company in their

current operating and board roles. Terms of the transaction were not disclosed.

Hanover and Tuckerman, partnering with Mr. Hyland and Mr. Denning, acquired Handi Quilter

from Peterson Partners, LP a Salt Lake City, Utah based private equity firm that invested in the Company in 2006. Commenting on the sale of the company at closing, Mr. Hyland said

“We are thrilled with the new and exciting opportunities that Hanover Partners provides to Handi Quilter and to the quilting industry. We look forward to working together as we continue to create and build innovative products, provide hands on education, and provide a leading brand in the growing and expanding quilt market.”

Commenting at the transaction’s closing, John E. Palmer, principal with Hanover Partners and

appointed chairman of the board, said, “Rarely do you find such a niche-manufacturer with a

great product, numerous growth prospects, and a turn-key management team. Handi Quilter has this unusual combination, and we look forward to working with the Company.”

Separately, Andrew N. Ford, Hanover principal and Handi Quilter board member commented, “We were impressed with Handi Quilter’s financial performance despite an overall softening of consumer spending, a testament to the quality of the Company’s products and significant brand strength. Our partnership with Tuckerman Capital allows us to provide both equity and debt, a complete capital structure, resulting in an expedited and simplified transaction process that is particularly attractive given the existing credit environment.”

Founded in 1994, Hanover Partners, Inc. is a private equity firm with offices in Portland, OR and San Francisco, CA. Hanover and its institutional partners acquire majority positions in lower middle-market manufacturers with proprietary, highly engineered, standard products, as well as consumer products and business services companies, with operating income of at least $1.5 million and operating margins exceeding 10%. With the addition of Handi Quilter, Hanover’s current portfolio of companies consists of 7 companies. Handi Quilter was Hanover Partner’s second platform acquisition of 2008, and third transaction overall for 2008, including add-on investments.

Web site contact information:

www.hanoverpartners.com

www.handiquilter.com