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High-flying entrepreneurs make $139 million aviation deal

September 09, 2001

By Dolph Bell

The Greenville News

 

Not everything went according to plan when Steve Townes and George Watts formed Ranger Aerospace Corp., a Greenville holding company, and used it to buy and sell Aircraft Service International Group Inc., a Florida company that provided fueling and other ground services to major airlines.

When Ranger acquired ASIG as an investment in the spring of 1998, Townes and Watts intended to take it public. Instead, as market turmoil threatened to reduce its value, their financial backers ordered them to cash out.

They got a preliminary offer of $152 million from Signature Flight Support Corp., a subsidiary of British conglomerate BBA Group plc. But after Signature Flight Support got a closer look at ASIG’s books, the parties agreed on $139 million, including the assumption of ASIG’s debt.

Even so, when the deal finally closed in mid-July, Townes, a longtime aviation executive, and Watts, a psychologist-turned-management consultant, came out looking good.

Working from a tiny office in Greenville, they raised $95 million to buy ASIG, boosted its annual revenues from $110 million to $188 million, through acquisition, joint ventures, restructuring and aggressive marketing, and brokered its sale, netting a profit to shareholders of more than $30 million, they said.

It took them three years and three months to get in and out. When they did, ASIG operated in 54 cities in the United States and Europe and counted Delta Air Lines, Northwest Airlines and British Airways among its customers. Not bad for a couple of relative unknowns swinging their first big deal.

”During the Internet bubble, we built an old-fashioned, blue-collar leveraged buyout,” Townes said. ”I think that’s neat.”

They won’t say how much they personally pocketed.

”The exact number is a military secret,” Townes said. ”I’ll put it this way: I don’t have to wince when I tell people how I did.”

Now, flush with confidence, Townes is gearing up to do it again. He’s moved Ranger Aerospace to Philadelphia, where he’ll use it as a vehicle to buy two more aviation services companies.

Watts will stay in Greenville and run Ranger Partners Group, a sister company that provides consulting and financial advice for aviation-related mergers and acquisitions.

 

Ranger Aerospace $139 Million Private Equity Deal

Watts, 49, originally intended to be a counselor, not a businessman.

But after earning a doctorate in counseling from William and Mary College in 1980, he couldn’t immediately find a job in the field. What he did turn up was a position as vice president of human resources with a real estate firm in San Antonio.

Later, he launched his own consulting business, helping companies assess executive talent following mergers or acquisitions, then became executive vice president with PM Realty Group, a Houston property management company.

While a consultant, Watts was hired to assess Townes, who was then a vice president with Dee Howard Aerospace Corp. in San Antonio. Impressed with one another, they kept in touch.

”We always said we were going to do a deal together,” Watts recalled.

Townes, also 49, graduated from West Point with an engineering degree in 1975, then spent three years wearing a black beret as part of the Army’s parachuting Ranger Battalion (Years later, he borrowed the Ranger name for his company.)

After leaving the Army with the rank of captain, Townes got a master’s degree in business administration from Long Island University and accepted the first of a series of executive slots he’s had with aviation companies.

He came to Greenville in 1990 to work as executive vice president with Stevens Aviation, which now has its headquarters at Donaldson Center Industrial Air Park.

While at Stevens, Townes got a job offer from Dial Corp. The conglomerate famous for its soap wanted to know whether he’d be interested in running ASIG, one of its subsidiaries.

”They just wanted me for window dressing so they could sell it,” Townes said. ”So I said, ‘Why don’t you make that decision now and sell it to me?”’

Dial Corp. didn’t take him seriously, but Townes kept writing to its chairman, asking when he was going to agree to sell.

Five years later, while Townes was president of Sabreliner Corp.’s commercial aircraft division in Phoenix, Dial Corp. called to tell him ASIG was going on the block.

Townes quit his Sabreliner job to acquire ASIG, and phoned Watts.

When the call came, Watts and his wife were grilling ribs on the back porch of their Houston home. He remembers Townes telling him, ”’I got a deal. Are you ready?’ And I said, ‘Yeah, let’s do it, buddy. Let’s go.’

”I knew this was what I wanted to do,” Watts said. ”Sometimes you just have to take a leap of faith.”

They put Ranger Aerospace in Greenville because that’s where Townes’ wife and children lived.

”When he said Greenville, South Carolina, I had to look on a map,” Watts said. ”It turns out it’s a nice place to live.”

They spent 13 months putting the financing together and closing the deal.

”We didn’t have staff,” Townes recalled. ”Legal expenses we had to cough up on our own. Accounting expenses we coughed up on our own. All the travel.”

”The only reason we did it is because we didn’t know any better,” Townes said. ”I almost went broke.”

The two pitched the deal to 54 financial institutions before securing a $13 million equity investment from John Hancock Corp., a Boston life insurer that invests in aviation companies, and a $70 million bridge loan from Canadian Imperial Bank of Commerce. Other investors supplied the rest needed to cover the purchase price plus transaction costs.

Ranger bought ASIG from Viad Corp., a Dial Corp. spinoff, for $95 million, a price Townes said was reduced to $86 million with tax maneuvers. In buying it, Ranger beat out several better-heeled suitors, including Lufthansa, the German airline. Ranger won the deal as the lowest bidder, but well favored by ViadAt the time, Ranger consisted of Townes, Watts and a part-time secretary. Today, it and its sister company, Ranger Partners, have seven full-time employees.

 

The future

While Townes and Watts are still partners, each is now responsible for operation of one of the sibling companies. 

Townes said he can’t reveal details of Ranger Aerospace’s next deal until Nov. 1, when he plans to announce the acquisition of two aviation service companies with combined revenues of $145 million. He said he’s already secured financing from a bank and private equity groups, but ”I’m just not ready to go out with a big announcement.” 

Townes said he moved Ranger Aerospace to Philadelphia for various reasons, including because that city is a bigger aviation hub than Greenville and a ”hotbed of venture capital.”

Watts said Ranger Partners is negotiating to provide advice on two merger deals.

”We also have several large, strategic-consulting deals lined up. We’re off to a roaring start,” Watts said. ”To be honest with you, we’re well known in the industry now.”