NEW YORK — Blue Wolf Capital Management LLC has acquired the assets of Chicago-based Hospital Laundry Services and the assets of Northern Illinois Hospital Services, based in Rockford, Ill., each from a consortium of not-for-profit hospitals. Blue Wolf also announced that Blue Wolf Capital Fund II L.P. has established Healthcare Laundry Systems (HLS), which provides laundry services to hospitals and clinics in the greater Chicago area.
As a result of the transactions, HLS is the largest and highest-volume provider of healthcare laundry services in North America, according to Blue Wolf. The terms of both transactions were not disclosed.
HLS is headquartered at Hospital Laundry Services’ facility in Wheeling, Ill. Hospital Laundry Services’ former management team will lead the new company. Combined, the two companies will employ about 20% more people than Hospital Laundry Services, and will be the largest U.S. hospital laundry facility, processing more than 50 million pounds of linen annually for more than 50 hospitals and 600 clinics in the greater Chicago area.
“HLS is the first investment made by Fund II, and we are pleased to bring this great company into our portfolio,” says Josh Wolf-Powers, a founding partner of Blue Wolf. “This transaction exemplifies Blue Wolf’s ability to solve the complex problems of sellers: In addition to working closely with HLS’s first-rate management, we worked constructively with multiple labor unions, including UNITE HERE and the International Brotherhood of Teamsters, to assemble a transaction that will provide the best possible outcomes for all of the company’s stakeholders.”
“We look forward to investing in and growing this business, as we continue to provide our customers with an exceptional level of service.”
The acquisitions were funded with equity investments from Blue Wolf Capital Fund II L.P. and the management team, vendor financing, a sale-leaseback of HLS’s facility to Cabot Properties Inc., as well as term and revolving credit from National City Bank.
Concurrent with the transaction, HLS has entered into long-term management service agreements with Crothall Services Group, which has provided management services to Hospital Laundry Services for three years, helping the company establish its market-leading position.
“Blue Wolf has been a terrific partner and has stood solidly with us through the capital markets turmoil of the past several months,” says Chuck Rossmiller, Crothall’s unit director for HLS, who led Hospital Laundry Services and will continue to lead HLS. “With every challenge that has been thrown before us — whether by an extraordinarily complex transaction or by the markets — Blue Wolf partnered with us and worked with the various sources of financing, and with the seller, to keep the transaction alive.”
“This transaction perfectly exemplifies our investment strategy,” says Adam Blumenthal, managing partner of Blue Wolf. “We worked closely with the sellers to assure a seamless transition to new, long-term relationships, we renegotiated multiple labor agreements to assure long-term stability for the business, we’ve partnered with a premier operator and a premier vendor to assure top-quality service, and we’ve begun to implement our strategy of growth through acquisition effective on the very first day of our ownership.”
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