The Des Moines Register: “Iowa-based private equity firms save Osceola steel plant”

In a Sunday piece, the Des Moines Register told the story of a struggling Osceola, Iowa-based steel plant, forced to cut jobs and barely keeping the lights on after falling on hard times. Thankfully, in April, the plant was purchased out of foreclosure by Top Tier Holdings LLC and Des Moines-based Capital Management Associates, both based in the Des Moines area.

Upon entering their partnership, the private equity firms provided organizational expertise and innovative thinking, getting the business back on track by renaming the plant to Iowa Steel Fabrication, getting steel shipments back on track, and developed a new business line targeting the state’s growing fertilizer industry.

Bill Freeman, general manager of the Clarke Electric Cooperative, credits the private equity firms with saving both Majona and its remaining workers. William Trickey, executive director of the Development Corporation of Clarke County, concurs.

“This is a good example of the positive role private equity can play,” Trickey said in a reference to the $3 trillion private equity industry. “These firms are based in Iowa and these guys are all Iowans. They don’t just run over a community, they serve a community. They have a stake in this. Their future and their families are tied up as well.”

Today, Iowa Steel Fabrication has 48 employees and is looking to fill six vacancies. The 46,646-square-foot plant sold for $1.56 million, according to the Clarke County Assessor’s office, an amount roughly equal to the balance on its mortgage.

“We can’t make trailers fast enough right now,” said Top Tier Partner Joe Greving, who serves as Iowa Steel Fabrication president.

The company is ideally positioned to provide the tanker trailers needed to haul the 55,000 loads that are expected to be generated each year by the $1.8 billion fertilizer plant that Orascom Construction Industries is building in southeast Iowa, said Top Tier partner Mike Taylor of Adel. The fertilizer plant will generate 2,200 tons of anhydrous ammonia daily once it’s completed in 2015.

Private equity invested nearly $800 million in eight Iowa-based companies in 2012. There are five private equity firms headquartered in Iowa, with roughly 65 private equity-backed companies located in the state.

To learn about private equity investment in other states, click here.