Merit Capital Partners

MTI International, Inc. (“MTI” or the “Company”) is an ISO 9002 certified full service provider of electronic contract manufacturing services, including the design and testing of PCB assemblies and custom thick-film hybrid circuit design and manufacturing. MTI was founded in 1978 by two former Allen-Bradley Corporation engineers with the financial backing of Sam Pitroda. The current CEO, Greg Martinek, took over the operation in 1986 when sales were approximately $3 million and under Greg’s management, the Company experienced consistent growth in revenues and profitability.

In the summer of 1998, Sam engaged a regional investment bank to sell the Company. Sam, who had not been involved in the day to day operations of MTI for a significant time, decided to sell MTI to seek liquidity for personal reasons and to assist in funding his various other initiatives. Sam expected a price of approximately 7.5x-8.0x EBITDA for the Company, but offers fell below expectations. At the same time, MTI’s earnings outlook for 1998 improved quite dramatically. Given the disparity between the offered price, Sam’s price expectations and the improved outlook for the company, Sam elected not to sell the Company and instead decided to pursue a recapitalization.

The regional investment bank approached Merit regarding a recapitalization. Merit worked directly with Sam and MTI management to structure a transaction that worked for all parties. Merit, along with a senior lender were able to structure a recapitalization so as to provide Sam with significant liquidity, in line with his initial value expectations, while he still maintained a large equity position. In addition, the CEO Greg Martinek was able to increase his ownership stake. Merit’s ability to structure the transaction, along with its good relationship with the senior lender allowed the recapitalization to take place without the assistance of an equity sponsor.

Merit was able to invest in a company with an excellent management team with strong growth prospects, while Sam was able to achieve significant liquidity, while maintaining a large equity position to participate in future growth. In addition, Greg Martinek increased his ownership stake to better align his interests with Sam and Merit. Merit is not involved in the day-to-day operation of the Company, but does support MTI as a member of the Company’s Board of Directors.