Turnaround expert Curnutte plans bank debt, DIP, direct investments
Published June 24, 2011 by Geert De Lombaerde
Local finance entrepreneur Steve Curnutte has launched an investment fund targeting distressed companies and the lenders looking to fix them.
The Capstan Fund has been in the works for several months and will focus on buying claims and notes from distressed circumstances, providing debtor-in-possession financing to operating companies in Chapter 11, and making direct equity or debt investments.
Curnutte isn’t disclosing the amount of money committed from private investors who are staying behind the scenes, but said he expects Capstan’s deals will range from $250,000 to $5 million. With the fund, he aims to fill a market gap created by the exit in recent years of a number of finance players.
“Over the past 20 years, a struggling company could look for salvation in a stronger competitor with growth aspirations, or look to be recapitalized by a bank with an appetite for price-adjusted risk taking,” he said. “But the depth and length of the downturn have left many businesses short on expertise to manage crisis and short on options for fresh capital.”
For Curnutte, Capstan completes a turnaround ecosystem he has been building since selling Finworth Mortgage to InsBank more than two years ago. Soon after that deal, he helped launch Tortola Partners, which provides debt restructuring and operational management know-how to struggling businesses or investors in them. Tortola also works closely with Emerge Law, a firm launched last year that specializes in workouts. Curnutte said Capstan gives him “the capital to move decisively” once turnaround opportunities present themselves.
Curnutte said the Capstan Fund expects to make its first investment soon and is eyeing a life cycle of about four years. He intends to follow up with larger funds after that.
“A ‘distressed circumstance’ usually means ‘depressed pricing’, but it should not always be mistaken as a ‘good deal,’” Curnutte said. “Our focus will be on assets we know a lot about, on mechanisms to remain well protected, and on companies who have a lot to offer.”