Vigor, MHI Acquired and Merged

In one a dramatic U.S. shipbuilding and repair move it was announced today that The Carlyle Group (NASDAQ: CG) and private equity firm Stellex Capital Management signed a definitive agreement to acquire and merge Vigor Industrial LLC, an infrastructure, defense, and maritime services company based in Portland, Oregon, and MHI Holdings LLC, a ship repair, maintenance, and other ship husbandry services company based in Norfolk, Virginia.

The transaction, subject to customary closing conditions, is expected to close by the end of the third quarter 2019.
Financial terms were not disclosed.

“Through this transaction, Vigor gains responsible, forward-thinking investors who will seek to build on our current platform while maintaining a values-driven culture,” said Frank Foti, President and CEO of Vigor. “In addition, we are excited to join forces with a company of MHI’s caliber which has a history of delivering strong results and shares our mission to serve the people who protect our country every day. This evolution takes us where we want to go, growing sustainable jobs into the future. I’m excited to be an investor in this adventure and to be a part of what’s to come.”

Tom Epley, President and CEO of MHI, said, “MHI is stronger than it has ever been. We are excited to continue our partnership with Stellex and look forward to working with The Carlyle Group and our new colleagues at Vigor. The MHI leadership team and our 800 employees across MHI Ship Repair, Seaward Marine and Accurate Marine remain committed to our mission.”

The Carlyle Group will become majority owner of the combined company.

Equity for the investment will come from the Carlyle U.S. Equity Opportunity Fund II, a $2.4 billion fund that focuses on middle-market and growth companies in the United States and Canada. As part of the transaction, Stellex Capital, MHI’s existing owner, will contribute new equity to the platform, while Vigor’s CEO Frank Foti will roll a portion of his existing Vigor ownership stake into the combined company.

A CEO search is underway for the new company. Tom Rabaut, former President and CEO of United Defense and a current Operating Executive at The Carlyle Group, and Admiral James Stavridis, a retired 4-star U.S. Navy officer, former NATO Alliance Supreme Allied Commander, and a current Operating Executive at The Carlyle Group, will both join the Board of Directors. Mr. Foti will also join the Board of Directors as Vice Chairman and will continue as Vigor’s CEO until a new CEO is retained. Tom Epley will continue to lead the MHI business.

Vigor Industrial LLC, majority-owned by CEO Frank Foti, is a provider of complex fabrication and ship repair services. It employs 2,300 people and operates eight drydocks across the Pacific Northwest and Alaska, including the largest floating drydock in North America. Vigor excels at ship repair, specialized shipbuilding, and other complex fabrication projects in support of aerospace, defense, and infrastructure end markets. While the company is widely known for building ferries, it also builds high-performance military craft for the United States and other allied foreign governments.

MHI Holdings LLC, owned by Stellex Capital, is a leading provider of full-range ship maintenance, repair, and modernization services to the U.S. Navy and Military Sealift Command in Norfolk, Virginia. MHI also provides hull cleaning, ship husbandry services, underwater painting and inspections, wastewater treatment, and chemical cleaning services globally. MHI is one of the only private shipyards in Norfolk that can service large surface combatants and amphibious ships.