Arctic Glacier changes ownership

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This article was published 23/03/2017 (3149 days ago), so information in it may no longer be current.

Winnipeg-based packaged ice company Arctic Glacier Group Holdings Inc. has changed hands from one U.S. private-equity firm to another.

The Carlyle Group has acquired it from H.I.G. Capital, which owned the firm for the past 41/2 years.

Neither side was disclosing the details of the deal this week, but published reports — including from Moody’s Investors Service — state Carlyle paid US$723 million.

In June 2012, Miami-based H.I.G. reportedly paid US$434 million for the assets of what was formerly called Arctic Glacier Income Fund out of creditor protection.

Since then, H.I.G. has maintained Arctic’s position as the second-largest ice company in North America. Arctic Glacier CEO Fred Smagorinsky said the plan is to continue the same strategy under Carlyle’s ownership.

“We are not anticipating any major changes to the organization or its strategic direction,” Smagorinsky said in an interview with the Free Press.

“They are very much interested in acquiring our current trajectory and helping us to continue to build on that.”

Smagorinsky, as well as another official with knowledge of the transaction, said Carlyle intends to maintain its head office operations in Winnipeg, which employs about 70 people.

Smagorinsky, along with a small senior management team, is based in Montclair, N.J.

Arctic Glacier operates 46 production plants and 52 distribution facilities across Canada and the northeastern, central and western U.S. servicing more than 75,000 retail accounts. That is up from 39 production plants and 48 distribution facilities in 2012.

The company continues to grow through acquisitions, but Smagorinsky said there has not been any dramatic change in the company’s geographic penetration.

This is now the second change in ownership since the previous iteration of the company, Arctic Glacier Income Trust, was placed in creditor protection in February 2012. The remnants of that company — which still has some value — continues to managed by trustees, Alvarez & Marsal. (Arctic Glacier Group Holdings, Inc. has nothing to do with the assets of the entity that is in creditor protection.)

In January 2015, there was a US$54.5-million cash distribution to unitholders, and the settlement earlier this year of a long-standing civil suit has led to speculation a further cash distribution will be forthcoming.

‘We are not anticipating any major changes to theorganization or its strategic direction’ — Fred Smagorinsky

Carlyle, which has about US$158 billion in assets under management, used a newly formed long-duration fund called Carlyle Global Partners to acquire Arctic Glacier.

Industry sources say rather than a three-to-five year hold for a typical private equity deal, Carlyle Global Partners may retain the asset for eight to 10 years.

Arctic Glacier is the fifth acquisition for Carlyle Global Partners, which was formed in 2014.

“The investment thesis and the agreement they have with investors allows for a significantly longer hold period — up to 10 years, if that’s what makes sense,” Smagorinsky said.

“They have flexibility based on the terms of the fund that does not really exist in more traditional private equity.”

He said the advantage it gives to Arctic Glacier is it can take a slightly longer perspective in building value and executing its strategy.

martin.cash@freepress.mb.ca