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November 07, 1996 - Castle Harlan Announces Sale of Smarte Carte

NEW YORK, November 7 -- Castle Harlan, Inc., the New York merchant bank, announced today the sale of its interest in Smarte Carte Corporation, the world's leading airport baggage cart and locker services company, to Haas Wheat & Partners, a Dallas investment firm, for $113.5 million.


An investment partnership controlled by Castle Harlan and the management of Smarte Carte had purchased the company in December 1993. Castle Harlan Managing Director David H. Chow noted that the sale represented a return of 25 times average invested equity.


Smarte Carte employs more than 1,000 people, including approximately 100 at its headquarters in White Bear Lake, Minnesota, and operates more than 300 locations worldwide. The company said it does not anticipate any changes in the management team or employee base as a result of the sale. Approximately 80 employees have an equity interest in the company.


"We have more than doubled our revenues and nearly tripled our run-rate operating profit in our 34-month association with Castle Harlan, and we look forward to being affiliated with Haas Wheat, which is known for its strategic investing in selected industries," said Grant McLennan, chairman and chief executive officer of Smart Carte.


"We are also grateful to Castle Harlan, which provided the financial strength and stability that enabled us to exceed our growth expectations," he said.


The company said that more than 35 million travelers use Smarte Carte baggage carts each year in 146 domestic and 12 international airports. Smarte Carte pioneered its industry in 1967 by supplying baggage carts to Minneapolis/St. Paul International Airport, the company's first contract.


Smarte Carte carts now are installed in Atlanta, the nation's busiest airport, the three New York City airports (Kennedy, LaGuardia and Newark), and both airports in Washington, D.C. (Dulles and National).


Other major domestic airport cities served by Smarte Carte include Los Angeles, San Francisco, Baltimore, Boston, New Orleans, Dallas/Ft. Worth, and Denver. International locations include Vancouver and Winnipeg, Canada; Hamburg and Leipzig, Germany; Sydney and Perth, Australia; and the Netherlands Antilles.


Smarte Carte also operates electronic and mechanical locker rental services in airports, train stations and bus terminals in 300 locations nationwide. In addition, the company is the only operator of self-service stroller rental systems in the world. Stroller operations include more than 200 shopping centers, retails stores, zoos and amusement parks in the U.S. and Canada. In the Minneapolis area, Smarte Carte strollers are used at the Mall of America, Rosedale, Southdale and the Signal Hills Shopping Center.


Nearly all of Smarte Carte's equipment is produced at its own assembly plant in White Bear Lake. In addition to carts, strollers, and dispensing equipment, the company designs and builds fully automated cart conveyor systems.


The 1993 acquisition of Smarte Carte involved a majority equity investment by Castle Harlan Partners II, L.P., a private equity investment partnership with capital of $275 million. Since Castle Harlan's founding in 1987, its investment partnerships have completed acquisitions exceeding $2.5 billion.


Castle Harlan was founded by John K. Castle, a pioneer in institutional private equity investing through limited partnerships and the former president and chief executive officer of Donaldson, Lufkin & Jenrette, the investment banking firm, and by Leonard M. Harlan, founder and former chairman of The Harlan Company, a diversified real estate finance and advisory firm that was sold earlier this year to Ernst & Young, the accounting firm.


Castle Harlan's portfolio companies have included Delaware Management Company, a Philadelphia money-management firm with more than $30 billion under management; Ethan Allen Interiors, the furniture manufacturer and retailer; Indspec Chemical Corp., a specialty chemical company now owned by Occidental Petroleum; and Morton's Restaurant Group, owner of Morton's of Chicago steakhouses and other restaurants.


Founded in 1992 by Robert B. Haas, chairman, and Douglas H. Wheat, president, Haas Wheat has an acquisition strategy focused on leading companies in niche markets that have strong growth potential. The firm invests with entrepreneurial senior management and, with affiliates, has completed more than $6 billion in acquisitions.