Anchorage Newsletter March 2019

Refinance of Affinity Education Group (“AEG”) completed

In mid December 2018, AEG successfully refinanced its debt facilities. The refinance recognises the significantly improved quality and performance of the business since acquisition by Anchorage Capital Partners three years ago. The new debt facility lowers the overall financing cost to the business and provides increased acquisition capacity. This enables AEG to continue to acquire centers in the company’s core middle market catchments and leverage the benefits of the Affinity Way culture and Affinity’s best practice operating processes and systems platform.

Anchorage Capital Partners remains fully invested in and supportive of the growth of AEG.

AEG is delivering strong momentum with the benefits of the operational change program apparent. The introduction of the new Child Care Subsidy in July 2018 is increasing the affordability of long day care across the industry, in particular to families in AEG’s core catchment areas and target market. We are excited about the prospects for the business in 2019. AEG also welcomed a new CFO, Cathy Montesin, at the start of 2019.

Cathy has previously held senior finance roles at Cleanaway Waste Management, Ernst & Young and has prior experience in a variety of accounting and transaction advisory roles.

Facilities First Australia (“FFA”) wins material new contracts and completes acquisition of Nationwide Health and Aged Care Services

FFA recently completed the purchase of Nationwide Health and Aged Care Services, which currently services over 120 aged care homes and hospitals. 250 Nationwide employees will join FFA as part of the acquisition. The acquisition will strengthen FFA’s cleaning business and further diversify the revenue mix into the high-value aged care industry.

FFA also recently won the ‘Whole of Government’ cleaning contract for the North Sydney region, servicing ~170 schools and~ 120 government agencies. This contract adds to the successful ‘Whole of Government’ maintenance wins for the South West Sydney and North Sydney regions. FFA was the only head contractor in metro Sydney to be awarded both maintenance and cleaning contracts. The mobilisation process to service the cleaning contract (~700 new staff) has been a focus for the business over the past few months.

Other key cleaning wins include the IKEA national contract and ANZ and Western Sydney stadiums. These wins have generated strong momentum for the start of 2019.

FFA has consolidated its headquarters in Sydney, with the Baulkham Hills and Alexandria teams now relocated to a single office in Macquarie Park.

Acquisition of South Pacific Laundry (“SPL”) and appointment of new members of executive leadership

In September 2018, Anchorage Capital Partners completed the acquisition of SPL.

SPL is a leading Australia-wide laundry operator, serving customers in the accommodation and healthcare sectors from a national network of processing plants and distribution centres.

SPL’s rapid growth through undertaking approximately +20 bolt-on acquisitions to complete its national footprint presents Anchorage Capital Partners with an opportunity to continue to drive consistency of best-practice processes across the SPL network.

SPL is led by Chief Executive Officer, Ray Hayes. Ray was previously General Manager of SPL and has worked in the commercial laundry industry for over 35 years.

Since acquisition SPL has appointed a new CFO, head of human resources, Brisbane branch manager, head of maintenance and a new national operations manager.

The operational improvement agenda is well underway with multiple initiatives being worked through in parallel as part of the Anchorage Capital Partners turnaround program in partnership with management. These initiatives include systems rationalisation, centralisation of core functions, labour management and the roll-out of best practice processes across the business.