Merit Capital Partners

In mid-2000 Mark Wason and Steve Burns, two long-time industry managers, founded WL Plastics (“WL” or the “Company”) with the support of a group of outside individual investors. The Company, a manufacturer of large diameter polyethylene (“PE”) pipe, was established in Casper, Wyoming to serve the natural gas industry, as well as water, sewer, and industrial pipe demand in the Rocky Mountain region.

Mark and Steve quickly grew WL into the dominant provider of large diameter PE pipe in the Rockies. Following three strong years of growth, they began to explore options which would allow them to provide their existing investors with an opportunity to realize a return on their investment in WL. Although both Mark and Steve also sought some liquidity, they were interested in finding new partners to invest with them to continue to grow their business. In particular, they sought a partner who could help finance the development of additional capacity to service significant PE pipe demand in the Western half of the United States.

Through a long-standing relationship with Spell Capital and PW Eagle (a Fund I portfolio company), Merit Capital Partners was introduced to the Company in the summer of 2003. Merit partnered with Mark and Steve in a management buyout that met their goals. The Company’s original financial backers cashed out with a handsome return on their investment, while Mark and Steve also received a significant cash distribution. More importantly, Mark and Steve maintained a meaningful stake in WL through their rolled investment and maintained day-to-day control of the Company’s operations, while adding a partner to support their growth plans.

Merit invested $14,000,000 of subordinated debt and equity in the Company to help fund the management buyout. Although most subordinated debt investors require the involvement of an institutional equity sponsor in a transaction of this nature, Merit is comfortable working directly with management teams like Mark and Steve. Working with Merit, Mark and Steve were able to minimize their dilution, maintaining significantly more ownership than would have been possible were an institutional equity sponsor involved. Further, Merit structured the transaction with a minimal amount of senior debt to allow for the immediate construction of a second plant utilizing the Company’s excess debt capacity while limiting dilution to the management investors. WL’s second large diameter PE plant, positioned to serve water and industrial markets in the Western United States, commenced operations in April, 2004.