Investment Criteria

Geography: Southwestern United States

Industries: Opportunistic

Company Size:
  - Minimum Annual Revenues of $15 million
  - Minimum Cash Flow Margin of 10%

Characteristics:
  - Experienced Management Team
  - Proven Stable Cash Flow
  - Established Industry
  - Growing Market Share
  - Unleveraged/Low Leverage

Investment Profile

Investment Size: $2 to $8 million

Structure:
  - Subordinated Debt
  - 3-Year Term / 5-Year Term
  - Current Interest
  - Equity Participation
  - 2nd Lien Behind Senior

Coupon: 12% to 14%

Involvement: Board Observation Rights

Prepayment:
  - No Penalties
  - Ownership Ratchets as Incentives for
     Early Principal Repayment

Transactions:
  - Expansion Capital
  - Acquisition Financing
  - Recapitalization

Not Considered: 
  - Start-ups
  - Turnarounds
  - Real Estate
  - Oil & Gas

Gaines Group, LLC focuses on the design, manufacture and marketing of home fragrance and candle products for sale through large specialty retail chains such as Pier 1 Imports and Kohl’s. Products supplied by Gaines Group include pillar and jar candles of various styles, sizes and fragrances as well as a line of liquid soaps, scrubs and lotions. Gaines Group’s products are highly valued by customers particularly for their outstanding innovation; and the company continuously works with customers to develop “custom brands” and category management programs.

“We approached Southwest Mezzanine Investments to help us buy a business embedded within a large NYSE company. This was not your straightforward “pre-packaged” deal, and getting to a closing was a bit more difficult than most. The team at SMI recognized the issues early on and, within only a few days of our initial meeting, we agreed on a structure that took these circumstances into account. The guys at SMI are smart, seasoned investors who stayed focused on the important issues and found creative solutions as we worked through the deal. We closed with the deal structure we had agreed to on day one.
    I was particularly impressed with SMI’s clear view and unwavering focus on its investment objectives, which created a perfect match with our own. I look forward to the next opportunity to work with this group.”

David Graham - Director of CS Equities, LLC