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Thermo Companies

The Thermo Companies have made two investments in the industrial sector. The first supported a management team in acquiring a platform company. This company, United Engines, subsequently made additional acquisitions and investments to broaden its products and services and to help fuel its growth. The second investment was made into a mezzanine debt fund and was done for strategic reasons, including the right to make additional direct investments in the respective portfolio companies. This approach permits Thermo to evaluate multiple opportunities in situations where the mezzanine fund has already conducted due diligence in both the company and the sector. Thermo is committed to providing additional growth capital as necessary to its companies and is actively working with the respective management teams on strategic growth opportunities.
  • United Engines LLC. In 2001, Thermo and a senior management team made a $10 million investment to purchase two related companies, United Engines and UE Manufacturing (collectively "United" http://www.unitedengines.com/), in the diesel engine distribution and power transmission businesses. United sells engineered equipment, parts and service to numerous markets including transportation, drilling, power generation, and oil field services. Combined revenues for 2001 were $50 million and grew to approximately $250 million by 2007. Thermo has a 20-year working history with this management team spanning multiple business ventures.

    United expanded into related businesses that added value to the existing distribution and service network through cost efficiencies and additional equipment and service offerings. In 2002 the United management team launched UE Compression to focus on the natural gas compression marketplace and leverage its experience and reputation in the oil and gas industry. To do this, United recruited the past president of a competitor whose division was being eliminated, who became responsible for manufacturing new equipment as well as providing parts and service to the compression industry for United.

    In 2004 United acquired Buck's Engine Company which assembles and sells up to 3,000 engines per year into the agricultural irrigation market. This acquisition provides access to a unique contract between General Motors Corporation and Buck's allowing the purchase of automotive style engines at a price not offered to more than a small handful of companies in the United States. Buck's then converts these gasoline engines to operate on propane, butane or natural gas fuels.

    Also in 2004, United obtained the territorial distribution and service rights to the Thermo King (http://www.thermoking.com/) line of temperature control systems for Texas. Thermo King's equipment is used in mobile applications including trailers, buses, shipboard containers and railway cars. Thermo King has been in business since 1938, is the preeminent name in this field, and operates through a global network of dealers in 75 countries. United, with the existing Thermo King operating management, purchased the assets and distribution rights for Texas from a company which was exiting the business. First year revenues were in excess of $10 million and were immediately accretive to earnings at United. Management believes there are additional opportunities to acquire Thermo King distributors in other geographic areas.

  • Prudential Capital Partners, L.P. ("PCP"). PCP is a $600 million mezzanine fund with exclusive access to Prudential Capital Group's mezzanine deal network. The fund is focused on the middle market with a preference for manufacturing and service companies and has a fundamental value orientation which stands to benefit from the disruptions in the high yield bond market. Public high yield investors are demanding increased liquidity in their investments resulting in increased offering sizes which often preclude smaller, high quality companies from accessing junior debt capital. PCP has access to many of these companies through its proprietary network and believes the investment opportunities are both attractive and abundant. Thermo's long-term relationship with Prudential, which began in 1989 with financings in Thermo's independent energy business segment, its common investment strategy and its investment in PCP, will provide it with attractive investment opportunities. Thermo is currently evaluating direct investments in certain PCP portfolio companies.



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