WESTPORT, Conn., Oct. 17, 2011 /PRNewswire/ -- Compass Diversified Holdings (NYSE: CODI) ("CODI" or the "Company"), an owner of leading middle market businesses, announced today that it has simultaneously entered into a definitive agreement to sell and consummated the sale of its majority owned subsidiary, Staffmark Holdings, Inc. ("Staffmark"), to a subsidiary of Japan-based Recruit Co., Ltd., ("Recruit") for a total enterprise value of $295 million.
The transaction is subject to customary escrow and working capital provisions. After these adjustments, as well as for an allocation to Staffmark's non-controlling shareholders and the payment of all of the transaction expenses, CODI received approximately $220 million of total proceeds from the sale at closing. This amount was in respect of its debt and equity interests in Staffmark and the payment of accrued interest and fees. In addition, the transaction also increases availability under CODI's revolving credit facility by approximately $67 million, as letters of credit guaranteeing payments for Staffmark's workers compensation liability are no longer required to be provided by CODI. The Company anticipates recording a gain on the sale of Staffmark ranging between $75 million and $90 million for the quarter ended December 31, 2011.
Commenting on the transaction, Alan Offenberg, CODI's Chief Executive Officer, stated, "The sale of Staffmark represents a highly profitable opportunity for us to monetize our interest in a great company on behalf of our shareholders. In addition, this sale creates significant liquidity for our company and expands our capacity for pursuit of future growth opportunities. While it was a difficult decision to end our long-standing relationship with Staffmark, one of our initial subsidiaries at the time of our IPO in May of 2006, we enjoyed and appreciate the opportunity to have worked with its outstanding management team for all these years. Together, we weathered and thrived through the recent economic turmoil, building Staffmark into one of the premier staffing companies in the U.S., while growing the company's cash flow significantly during our period of ownership. We wish both Staffmark and Recruit continued success in the future."
Mr. Offenberg added, "With this transaction, CODI has now realized more than $185 million in gains since going public in May 2006. As in the past, we intend to utilize the proceeds from the sale of Staffmark to further strengthen our balance sheet and take advantage of both internal and external opportunities, while maintaining the ability to provide attractive distributions to our owners."The proceeds will be used to repay substantially all of the outstanding debt under the Company's revolving credit facility. Additional information on the transaction will be available on the Company's current report on Form 8-K that will be filed with the Securities and Exchange Commission (the "SEC") later this week.