Crane shares the wealth
The company announced yesterday that it will sell a 20 percent minority ownership stake to an affiliate of New York-based investment firm Lindsay Goldberg LLC for an undisclosed sum.
The deal was nine months in the works, but involved years of discussion. It will raise "millions" in capital to satisfy family members who have been seeking to liquidate some of their company shares, provide Crane & Co. with a partner to help guide future growth and possible acquisitions, and allows the family to maintain control of the company, according to its chairman and CEO, Charles Kittredge, himself the son of a Crane.
He declined to specify the value of Lindsay Goldberg's investment.
Crane & Co. has been the sole provider of U.S. currency paper since the 1879, a family-led operation entwined for centuries with generations of area residents who have worked in the Dalton mills, which now employ 1,000.
The company has several hundred employees in its other plants in North Adams, New Hampshire and Sweden.
Dalton residents yesterday were surprised at news that the company had invited outside investment.
"Oh, my God, no," said Gail Pinna, the daughter of Crane Mill workers and who herself cared for an elderly Crane family member years ago. "But I have to trust in their judgment."
"I'm surprised, of course, but you always want to be encouraging and help them be a successful business," said Louisa Horth, a Select Board member. "I am sure they are doing whatever they can to be successful."
Kittredge said once employees and neighbors understand that the investment funds will bring business growth to Crane and financial relief to some Crane family members, they can rest assured.
The Crane shareholders, until the 1960s, were a handful of male family members, but in recent decades shares in the business have been passed on to more family members, many of whom have no direct ties with the Crane business. About 90 members of the family are now shareholders, he said.
"When people are far away, their interests are not necessarily aligned with the business," said Kittredge. "They are looking for ways to get liquidity, and because we're privately held, they can't go their stockbroker and sell their shares. And for some family members, this is all they own."
He said the company also needs access to capital in order to expand its business in the non-wovens industry producing products for water filtration, decorative shades and other applications and in development of security paper for non-currency purposes.
"We could have gone out and borrowed a ton of money from the bank, and we chose not to," said Kittredge, who said the business will be healthier with capital, rather than debt.
Lindsay Goldberg LLC, with its $8 billion of equity capital and a particular niche with family-owned businesses, rose to the top in consideration of several investors, said Kittredge.
"When the board decided to explore the possibility of an outside investor, we were determined to limit our search to those firms we believed would be ideal partners for Crane," he said. "In Lindsay Goldberg, we found just such a firm. Their primary goal is to partner with companies that have significant growth potential and a reputation of excellence. We believe that description fits Crane perfectly."
The co-managing partners of Lindsay Goldberg Alan Goldberg and Robert Lindsay will assume seats on the Crane & Co.'s board of directors. A message left with the company's New York office yesterday was not returned.
As a privately held firm, Crane & Co. has kept financial matters under wraps, but a federal government Web site reported earlier this year that the U.S Bureau of Engraving and Printing spends about $115 million per year on the type of paper made by Crane, a secret blend of linen and cotton.
No other company has succeeded in breaking into the U.S. currency paper business, and Crane has continued to invest millions in new technology to meet federal requirements.
In 2001, the company completed a deal to invest $20 million in a new currency operation in Sweden, in order to sell paper to expanding overseas markets in China, India and other countries, including Sweden.
For Gail Pinna, a member of the town's Historical Commission, the news has made her nervous: She never believed Hillcrest Hospital would be merged with Berkshire Medical Center, and never thought GE would leave Pittsfield. She always believed Crane & Co. would be a family business.
"But it's not as if we're selling the whole business, we're selling a slice of it," said Kittredge. "We're bringing in a great shareholder and maintaining control. If the family was getting out, we'd be having a totally different conversation."
The board, he said, was 100 percent in favor of an investment strategy, he said.
"People are very pleased," he said.
Efforts to reach other members of the Crane family yesterday, including Kittredge's predecessor, Lansing Crane, were not successful.
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