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Sun Capital Adds New Managing Director

Jack Knott will give up his seat as CEO for Exopack to take on his new role as managing director at the leverage buyout firm. The firm squashes rumors that Exopack was conducting a sales process.

Tamika Cody

Sun Capital Partners has uprooted Jack Knott, who is the CEO of the firm’s flexible packaging portfolio Exopack Holding Corp, and placed him on the operations team to serve as managing director. Knott will stay on board as the chairman of Exopack and its president and COO, Tom Vale, will serve as interim CEO while they conduct a search for a replacement.

“This is something new for me,” Knott expressed to Mergers & Acquisitions who said he is excited to help Sun Capital build out its packaging portfolio. Knott has more than 30 years of experience in the packaging and petrochemical industries. His most recent stint at Exopack, which is a global manufacturer of flexible packaging and coated products, lasted six years.

Sun Capital acquired the company in 2005 and merged the Spartanburg, South Carolina–based business with Cello–Foil Products and the Packaging Group.

Over the years Knott had his hands in expanding the company on a global level which followed up with a new division. The Global Packaging Linx segment helped the company to expand its offerings through joint ventures abroad. Last year Exopack headed over to Lebanon to form a joint venture with Indevco and launched CEDEX Plastics, a film manufacturing operation.

Knott also saw the company through a number of acquisitions and integrations. In 2007, it bought the Electronic & Engineered Films division of InteliCoat Technologies and then created Exopack Advanced Coatings. During the same year it bought the Performance Film unit from DuPont Liquid Packaging Systems and with it formed Exopack Performance Films. Last year the company formed Exopack Meat, Cheese & Specialty with the acquisition of Alcan Cheese & Meat. Exopack later paired the asset up with its consumer food businesses and named the division Consumer Food & Specialty Products.

In April, the Financial Times’ new service, mergermarket.com, reported that Exopack was on the auction block and Bank of America was advising on the sale. However, in June the company completed a recapitalization which included a $350 million senior secured term loan facility, a $235 million senior note offering at 10% and a $75 million revolving line of credit. Exopack used the proceeds to pay off its existing $320 million senior notes at 11.25%, as well as its existing line of credit, and was able to pay a dividend to Sun Capital.

“At this point we just did that dividend recap. We have just been focused on insuring that the financial expectations that were set are solid. We really have not set a specific exit strategy for Exopack,” said Knott when asked if he was preparing the company for a sale. A source within Sun Capital added that the firm is not pursuing a sale and have no plans to for the next one to two years.

The recapitalization gave Exopack more freedom to invest in equipment and technologies, and to pursue complimentary acquisitions. However, given that the company just completed the recapitalization Knott said Exopack is taking a break from making any new purchases and will shift its focus on growing organically.

Knott has taken a look at more than 100 companies in the space and said the revenues are ranged across the board. Typically potential targets are customer centric and mostly in the third quartile of financial metrics. “We have not been buying broken companies. We’ve been buying companies in the eight to nine percent EBITDA range,” said Knott.

Sun Capital has a number of investments in the packaging industry. Its current portfolio include Albéa, a French–based supplier of tube, fragrance and cosmetic plastic packaging to the beauty industry; the Britton Group, a European provider of flexible packaging solutions; PACCOR, a European provider of rigid packaging solutions; and PaperWorks Industries, a North American integrated full–service packaging provider.

Knott said the industry is in consolidation mode and currently has more than 400 companies in it. “It is a very good industry, it is positioned well because its mainly serving in uses that are consumer based around discretionary items like food,” he said. There are some segments like the glass and metal industry that’s already consolidated but certain segments like flexible packaging have yet to consolidate.