Irving Place Recaps Multi Packaging Solutions

Irving Place Capital is planning a $245 million dividend recap on Multi Packaging Solutions Inc., a source familiar with the situation said.

The New York-based middle market private equity firm formed Multi Packaging in 2004 as a platform to acquire specialty printing and packaging businesses. Since then, the firm rolled up six different businesses serving the pharmaceutical, multi-media, and consumer markets. The firm did one refinancing in 2006 to fund more acquisitions and facility expansions. The company’s annual revenues grew from $150 million in 2004 to $500 million last year.

The investment is five years old and there is no exit in sight; Irving Place plans to continue growing the company with its roll-up strategy, source said. But the company’s revolving loan matures in 2011, so Irving Place decided to lower the company’s cost of capital by retiring its mezzanine debt and taking on a new senior facility.

The $235 million dividend recap represents 60% of all equity invested in the company, the source said. The company expects to maintain a B2 corporate family rating from Moody’s. Leverage will be between 3.6x and 3.9x.

Wells Fargo is placing the facility. Irving Place Capital is the former merchant banking arm of Bear Stearns. The company’s other packaging investments include Chesapeake Corporation, a specialty paperboard packaging company the firm acquired in 2009.