Gray Line of Tennessee
“It’s easy to see why Jeff and the CapX team have been as successful as they’ve been. They focus on the important issues, move quickly, and are easy and pleasant to work with.”
James C. Phillips, Jr. XMi Holdings, Inc., parent of Gray Line of Tennessee
RLCL Acquisition, LLC d/b/a/ Gray Line of Tennessee (GLT) operates over 100 commercial vehicles providing charter coach, regional transit, casino runs, school bus services, and sightseeing tours offering visitors to Nashville the ultimate thrill in experiencing the Music City. Gray Line was founded in 1974 by two brothers providing sightseeing services for the city’s country & western attractions. The brothers acquired the Gray Line brand in 1988 to execute on a charter motor coach growth strategy which grew until it was purchased by private equity in 2009. XMi acquired a controlling interest in 2012 in partnership with the state of Tennessee’s innovative “TNInvestco” program.
Phase One Capital, working on behalf of Gray Line, approached CapX looking for a combination of growth capital and new term debt financing that could be used to refinance Gray Line’s existing bank facility and potentially provide a dividend payout to one of the founding brother’s roll over value from the original private equity transaction. XMi offered up their ability to finance future capex spend via a new captive leasing special purpose entity if CapX could focus on both bank debt refinance and former shareholder redemption.
THE CAPX SOLUTION
Gray Line provided an updated asset appraisal on the company’s fleet and shop machinery & equipment giving CapX a reliable starting place for a re-leveraging of the revenue producing assets. CapX appreciated XMi’s conservative approach to accepting new leverage on the balance sheet and its commitment to inject additional capital into new fleet additions. CapX provided a flexible piece of senior term debt secured by GLT’s vehicle fleet that mirrors mezzanine debt with an interest only period along with amortization following through to a five year balloon payment. In addition, XMi secured a working capital lender to provide a revolving line of credit secured by accounts receivable to support the company’s day to day liquidity needs.
“CapX quickly viewed Gray Line of Tennessee as the market leader in their category and the market demographics of Nashville to be very attractive. XMi’s commitment to Gray Line’s growth and senior management leadership further compelled CapX’s desire to be included in the company’s recapitalization.”-Jeffry S. Pfeffer, Managing Partner of CapX Partners