Through its proprietary fund, Treadstone Capital Management, L.P., the firm seeks investments in areas where it has special knowledge. Core investments are directed toward economic dislocations caused by financial market conditions, misunderstood assets and out-of-favor companies and properties. The extensive personal network of the firm's professionals, built-up over many years, plays a significant role in sourcing such opportunities. Investments generally fall into one of two categories:

Discounted Debt/Distressed Asset Acquisitions

As a primary investment focus, Treadstone acquires discounted corporate debt and undervalued assets from various financial institutions, both domestic and international-based. The firm will also acquire similar, event-driven, assets from a company or private individual. Such investments, almost always asset-based, may range from a package of corporate loans to a single real estate asset. Over the years, Treadstone has made acquisitions in more than 35 states plus the U.S. Virgin Islands.

Treadstone is a value added investor that will restructure or workout a corporate loan and reposition and/or rehabilitate a real estate asset. Additionally, the firm has expertise in all areas of asset acquisition and management including, but not limited to, due diligence, pricing, account maintenance and information technology.

Although Treadstone has made single discounted debt investments above $50 million, the firm prefers investments of between $2 million and $25 million. Outlays above $25 million will typically include an institutional co-investor. Utilizing a short-to-medium hold strategy, the objective is to achieve superior risk adjusted returns without compromising the preservation of capital.

Target investment opportunities include discounted senior and subordinated bank debt, trade or vendor claims, 363 sales and similar asset acquisitions. On a highly selective basis, related targets may include non-performing real estate debt, partnership interests or other situations that allow for substantive financial upside.

Regardless of the type of debt instrument, Treadstone seeks positions in an amount or under a structure that minimizes the unilateral actions of other stakeholders. Similarly, the firm is always alert for opportunities to obtain, where appropriate, ultimate control of a borrower.

Operating Company Acquisitions

Another key investment focus is the acquisition of controlling interests in financially-challenged operating companies. Primary interest is directed towards lower-to-middle market companies, with revenues between $10 million and $250 million, where investments can be made at significant discounts to intrinsic value. Treadstone seeks to invest between $5 million and $25 million in each acquisition and has access to substantial co-investment capital for larger transactions.

Acquisition candidates include financial re-capitalizations, companies confronting turbulent ownership change and corporate divestitures of smaller, non-strategic, subsidiaries. The target company may already be in bankruptcy or in an industry undergoing significant transition. A longer term hold strategy is employed in such transactions and typically involves an operational turnaround. While the firm relies on experienced management to direct operations, it is actively involved with the strategic management and direction of acquired targets.

Industries of particular interest include basic manufacturing, logistics, distribution and financial service companies located throughout United States. The operational background of the firm's leadership combined with its expertise in workouts provides a significant advantage in managing such acquisitions.

Internal leadership strength is reinforced by a number of outside, senior-level, executives that can be brought into a turnaround management scenario. Access to such executive support is a critical component to maximizing investment returns. Moreover, the firm enjoys a long-time informal relationship with a leading middle-market turnaround firm that reinforces its ability to drive rapid change.