Wesray Capital Corporation
Encyclopedia
Wesray Capital Corporation was an early private equity
firm focussing on leveraged buyout investments. The firm was founded by former US Secretary of the Treasury William E. Simon
and former New Jersey Nets
owner Ray Chambers
.
The firm is known for its 1982 investment in Gibson Greetings
as well as for its involvement in seeding other notable private equity firms in the 1990s including Vestar Capital Partners
and Catterton Partners
.
The firm was based in New York City
.
, Ray Chambers
, and Frank E. Walsh, Jr. The new partners, who had met earlier that year, named their new business for themselves; with the exception of Walsh. The "WES" in the firm's name represented Simon's initials and "RAY" was for Chamber's first name. Before forming Wesray, they had collaborated in the acquisition of a few small companies, including Tactec Systems, the mobile communications division of RCA; Long Island Oyster Farms; and Mobile Music Man, a business that specialized in the rental of school musical instrument
s.
In January 1982, Simon, Chambers, and a group of other investors acquired Gibson Greetings
, a producer of greeting cards. The purchase price for Gibson was $80 million, of which only $1 million was rumored to have been contributed by the investors ($330,000 each). By mid-1983, just sixteen months after the original deal, Gibson completed a $290 million IPO and both Simon and Chambers made approximately $70 million each. About a year after the Gibson Greetings purchase, Wesray acquired Heekin Can
from Sir James Goldsmith through a complex leveraged buyout transaction in which almost all of the purchase price of the company was obtained through Heekin's own cash reserves, loans and credit lines against Heekin's asset
s, and a sale-and-leaseback
arrangement for Heekin's facilities. In his autobiography, Simon said that Wesray contributed only one million dollars to buy a company worth $82.9 million, while the International Directory of Company Histories reports Wesray's contribution as only $250,000 and the total purchase price as $108.8 million. When Heekin went public through a stock offering in 1985, Wesray realized a profit of $28 million from the sale of its Heekin holdings. Simon and Wesray would later complete the $71.6 million acquisition of Atlas Van Lines
. In all, between 1981 and 1984 Wesray acquired 14 companies that Simon described in his autobiography as "mostly little known", later selling them for what he described as "incredible profits." The success of the Gibson Greetings investment attracted the attention of the wider media to the nascent boom in leveraged buyouts.
After Simon ended his active involvement in the firm's management, Chambers was responsible for deals including the 1985 purchase of Avis Rent a Car System
, which was sold 14 months later to an employee stock ownership plan for $1.75 billion along with the sale of other Avis assets for $674 million, netting a profit of $740 million on a $10 million capital outlay. Other investments include RKO Pictures
, Six Flags
, Ally & Gargano
and The Outlet Company
.
were early investors in buyout firm Vestar Capital Partners
, investing in the first Vestar fund in 1988.. John D. Howard
, who had been a senior vice president and partner at Wesray would become co-CEO of Vestar and later CEO of Bear Stearns Merchant Banking (Irving Place Capital
).
In 1990, the founders of Catterton Partners
, Frank Vest, Michael Chu and Scott Dahnke, partnered with former US Secretary of the Treasury William E. Simon
to form what was then known as Catterton-Simon Partners.
Private equity
Private equity, in finance, is an asset class consisting of equity securities in operating companies that are not publicly traded on a stock exchange....
firm focussing on leveraged buyout investments. The firm was founded by former US Secretary of the Treasury William E. Simon
William E. Simon
William Edward Simon was a businessman, a Secretary of Treasury of the U.S. for three years, and a philanthropist. He became the 63rd Secretary of the Treasury on May 8, 1974, during the Nixon administration. He was reappointed by President Ford and served until 1977. Outside of government, he was...
and former New Jersey Nets
New Jersey Nets
The New Jersey Nets are a professional basketball team based in Newark, New Jersey. They are members of the Atlantic Division of the Eastern Conference in the National Basketball Association...
owner Ray Chambers
Ray Chambers
Raymond G. Chambers currently serves as United Nations Secretary-General’s Special Envoy for Malaria. He was appointed to this position by Secretary-General Ban Ki-moon in February 2008...
.
The firm is known for its 1982 investment in Gibson Greetings
American Greetings
American Greetings Corporation, Inc. is the world's largest publicly-traded greeting card company. It is based in Brooklyn, Ohio and sells paper greeting cards, electronic greeting cards, party products , and electronic expressive content...
as well as for its involvement in seeding other notable private equity firms in the 1990s including Vestar Capital Partners
Vestar Capital Partners
Vestar Capital Partners is an American private equity firm focusing on leveraged buyout transactions in the United States, Europe and Asia.The firm, which was founded in 1988 is headquartered in New York City with offices in Boston, Massachusetts, Denver, Colorado in the US as well as Paris, Milan,...
and Catterton Partners
Catterton Partners
Catterton Partners is a private equity firm specializing in leveraged buyouts, recapitalizations and growth capital investments in middle-market companies...
.
The firm was based in New York City
New York City
New York is the most populous city in the United States and the center of the New York Metropolitan Area, one of the most populous metropolitan areas in the world. New York exerts a significant impact upon global commerce, finance, media, art, fashion, research, technology, education, and...
.
History
Wesray was formed in September 1981 by William E. SimonWilliam E. Simon
William Edward Simon was a businessman, a Secretary of Treasury of the U.S. for three years, and a philanthropist. He became the 63rd Secretary of the Treasury on May 8, 1974, during the Nixon administration. He was reappointed by President Ford and served until 1977. Outside of government, he was...
, Ray Chambers
Ray Chambers
Raymond G. Chambers currently serves as United Nations Secretary-General’s Special Envoy for Malaria. He was appointed to this position by Secretary-General Ban Ki-moon in February 2008...
, and Frank E. Walsh, Jr. The new partners, who had met earlier that year, named their new business for themselves; with the exception of Walsh. The "WES" in the firm's name represented Simon's initials and "RAY" was for Chamber's first name. Before forming Wesray, they had collaborated in the acquisition of a few small companies, including Tactec Systems, the mobile communications division of RCA; Long Island Oyster Farms; and Mobile Music Man, a business that specialized in the rental of school musical instrument
Musical instrument
A musical instrument is a device created or adapted for the purpose of making musical sounds. In principle, any object that produces sound can serve as a musical instrument—it is through purpose that the object becomes a musical instrument. The history of musical instruments dates back to the...
s.
In January 1982, Simon, Chambers, and a group of other investors acquired Gibson Greetings
American Greetings
American Greetings Corporation, Inc. is the world's largest publicly-traded greeting card company. It is based in Brooklyn, Ohio and sells paper greeting cards, electronic greeting cards, party products , and electronic expressive content...
, a producer of greeting cards. The purchase price for Gibson was $80 million, of which only $1 million was rumored to have been contributed by the investors ($330,000 each). By mid-1983, just sixteen months after the original deal, Gibson completed a $290 million IPO and both Simon and Chambers made approximately $70 million each. About a year after the Gibson Greetings purchase, Wesray acquired Heekin Can
Heekin Can
Heekin Can, Inc. is a division of the Ball Corporation that was formerly an independent company that was one of the largest metal can manufacturers in the United States.-Establishment and operation as a family business:...
from Sir James Goldsmith through a complex leveraged buyout transaction in which almost all of the purchase price of the company was obtained through Heekin's own cash reserves, loans and credit lines against Heekin's asset
Asset
In financial accounting, assets are economic resources. Anything tangible or intangible that is capable of being owned or controlled to produce value and that is held to have positive economic value is considered an asset...
s, and a sale-and-leaseback
Leaseback
Leaseback, short for sale-and-leaseback, is a financial transaction, where one sells an asset and leases it back for the long-term; therefore, one continues to be able to use the asset but no longer owns it...
arrangement for Heekin's facilities. In his autobiography, Simon said that Wesray contributed only one million dollars to buy a company worth $82.9 million, while the International Directory of Company Histories reports Wesray's contribution as only $250,000 and the total purchase price as $108.8 million. When Heekin went public through a stock offering in 1985, Wesray realized a profit of $28 million from the sale of its Heekin holdings. Simon and Wesray would later complete the $71.6 million acquisition of Atlas Van Lines
Atlas Van Lines
Atlas Van Lines is a moving company formed in 1948 by a group of local transfer and storage firms. As an agent-owned company it is similar in form to a cooperative. It has about 500 agents worldwide , of which 75 own shares in Atlas World Group, which controls Atlas Van Lines and other related...
. In all, between 1981 and 1984 Wesray acquired 14 companies that Simon described in his autobiography as "mostly little known", later selling them for what he described as "incredible profits." The success of the Gibson Greetings investment attracted the attention of the wider media to the nascent boom in leveraged buyouts.
After Simon ended his active involvement in the firm's management, Chambers was responsible for deals including the 1985 purchase of Avis Rent a Car System
Avis Rent A Car System
Avis Rent a Car System, LLC is a car rental company headquartered in Parsippany-Troy Hills Township, New Jersey, United States. Avis, Budget Rent a Car and Budget Truck Rental are all units of Avis Budget Group....
, which was sold 14 months later to an employee stock ownership plan for $1.75 billion along with the sale of other Avis assets for $674 million, netting a profit of $740 million on a $10 million capital outlay. Other investments include RKO Pictures
RKO Pictures
RKO Pictures is an American film production and distribution company. As RKO Radio Pictures Inc., it was one of the Big Five studios of Hollywood's Golden Age. The business was formed after the Keith-Albee-Orpheum theater chains and Joseph P...
, Six Flags
Six Flags
Six Flags Entertainment Corp. is the world's largest amusement park corporation based on quantity of properties and the fifth most popular in terms of attendance. The company maintains 14 properties located throughout North America, including theme parks, thrill parks, water parks and family...
, Ally & Gargano
Ally & Gargano
Ally & Gargano was an American advertising agency, which Advertising Age named agency of the year in 1982. Famous clients included Volvo, Saab, Federal Express , and Dunkin' Donuts ....
and The Outlet Company
The Outlet Company
The Outlet Company was a corporation based in Providence, Rhode Island, which owned holdings in both retail and broadcasting. The centerpieces of the group was its flagship Providence store and WJAR radio and television, also in Providence....
.
Involvement with other private equity firms
Wesray and ChambersRay Chambers
Raymond G. Chambers currently serves as United Nations Secretary-General’s Special Envoy for Malaria. He was appointed to this position by Secretary-General Ban Ki-moon in February 2008...
were early investors in buyout firm Vestar Capital Partners
Vestar Capital Partners
Vestar Capital Partners is an American private equity firm focusing on leveraged buyout transactions in the United States, Europe and Asia.The firm, which was founded in 1988 is headquartered in New York City with offices in Boston, Massachusetts, Denver, Colorado in the US as well as Paris, Milan,...
, investing in the first Vestar fund in 1988.. John D. Howard
John D. Howard
John D. Howard is CEO of Irving Place Capital and was Senior Managing Director of Bear Stearns. He is the manager of the $3 billion Bear Stearns Merchant Banking Fund III...
, who had been a senior vice president and partner at Wesray would become co-CEO of Vestar and later CEO of Bear Stearns Merchant Banking (Irving Place Capital
Irving Place Capital
Irving Place Capital, formerly known as Bear Stearns Merchant Banking , is a private equity firm focused on leveraged buyout and growth capital investments in middle-market companies across a range of industries....
).
In 1990, the founders of Catterton Partners
Catterton Partners
Catterton Partners is a private equity firm specializing in leveraged buyouts, recapitalizations and growth capital investments in middle-market companies...
, Frank Vest, Michael Chu and Scott Dahnke, partnered with former US Secretary of the Treasury William E. Simon
William E. Simon
William Edward Simon was a businessman, a Secretary of Treasury of the U.S. for three years, and a philanthropist. He became the 63rd Secretary of the Treasury on May 8, 1974, during the Nixon administration. He was reappointed by President Ford and served until 1977. Outside of government, he was...
to form what was then known as Catterton-Simon Partners.