Safeguard Scientifics to Acquire 36% Interest in Penn Mezzanine

Represents a Strategic Component of Safeguard’s Platform Expansion Initiative

WAYNE, Pa.--()--Safeguard Scientifics, Inc. (NYSE:SFE), a holding company that builds value in growth-stage life sciences and technology companies, today announced that it has signed a definitive agreement to acquire a 36% ownership interest in Penn Mezzanine, a mezzanine platform which commenced operations in early 2010 with over $30 million of initial fund capital. In addition to this capital, Safeguard will deploy up to $30 million over a several year period in lending opportunities that meet certain predefined criteria alongside existing and future Penn Mezzanine funds.

“This strategic partnership represents Safeguard’s first initiative to augment its capabilities as a provider of growth capital and to participate in the management of external sources of capital,” said Peter J. Boni, President and CEO of Safeguard. “This initiative is expected to produce management fee income and profit participation. Managed by a team of experienced mezzanine lenders, this platform will enable Safeguard to provide flexible financing strategies to our current and prospective partner companies, as well as other potential borrowers, to build value in their business and ultimately realize that value through a well-timed exit.”

Penn Mezzanine will be managed day-to-day by an experienced team with a proven track record:

  • Donald K. Rice, Managing Partner — 30+ years of principal investing and fund management experience. He also has a deep background in credit and leveraged lending, operating management and investment banking. In total, he has invested $1.1 billion in 82 transactions, with 59 realized mezzanine debt exits (Gross IRR of 17.5% and 1.5x return on capital). Previous roles include: founding partner of Rice Capital/RSTW Partners, a $900 million mezzanine/equity investment firm; Chairman and CEO of Ascend Acquisition Corporation, a Special Purpose Acquisition Corporation that went public in 2006; President of First Texas Merchant Banking Group; Vice President with PruCapital, Inc. (Prudential Insurance Co.); President and CEO of Hunter Air Freight. Currently, Don serves as a director of, Mrs. Fields Famous Brands, and various other portfolio companies.
  • Darl A. Petty, Managing Director — 18 years of experience in lending, mezzanine financing and private equity. In total, he has analyzed, structured and managed investments with 40 transactions closed. Previous roles include: Partner with Capital Point Partners; Managing Director with Rice Partners/RSTW Partners; and Vice President in the Structured Finance Group of JPMorgan Chase Bank.

In addition, Stephen T. Zarrilli and Brian J. Sisko, from Safeguard’s executive management team, will join Penn Mezzanine’s Management Committee.

“Penn Mezzanine will target companies with proven business models and strong leadership,” said Don Rice. “This platform will provide meaningful and flexible junior capital plus operational support services to growth-stage businesses. In addition, it will provide rational levels of mezzanine financing to properly capitalize lower middle-market mid-Atlantic enterprises.”

About Safeguard Scientifics

Founded in 1953 and based in Wayne, PA, Safeguard Scientifics, Inc. (NYSE: SFE) provides growth capital for entrepreneurial and innovative life sciences and technology companies. Safeguard targets life sciences companies in Molecular and Point-of-Care Diagnostics, Medical Devices, Regenerative Medicine, Specialty Pharmaceuticals and selected healthcare services, and technology companies in Internet / New Media, Financial Services IT, Healthcare IT and selected business services with capital requirements of up to $25 million. Safeguard participates in expansion financings, corporate spin-outs, management buyouts, recapitalizations, industry consolidations and early-stage financings. For more information, please visit our website at www.safeguard.com, our blog at blog.safeguard.com or you can follow us on Twitter at twitter.safeguard.com or on LinkedIn at linked.safeguard.com.

Forward-looking Statements

Except for the historical information and discussions contained herein, statements contained in this release may constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Our forward-looking statements are subject to risks and uncertainties. The risks and uncertainties that could cause actual results to differ materially, include, among others, managing rapidly changing technologies, limited access to capital, competition, the ability to attract and retain qualified employees, the ability to execute our strategy, the uncertainty of the future performance of our companies, acquisitions and dispositions of companies, the inability to manage growth, compliance with government regulations and legal liabilities, additional financing requirements, the effect of economic conditions in the business sectors in which our companies operate, and other uncertainties described in the Company's filings with the Securities and Exchange Commission. Many of these factors are beyond our ability to predict or control. In addition, as a result of these and other factors, our past financial performance should not be relied on as an indication of future performance. The Company does not assume any obligation to update any forward-looking statements or other information contained in this news release.

Contacts

Safeguard Scientifics, Inc.
John E. Shave
Vice President, Business Development and Corporate Communications
610-975-4952

Release Summary

Safeguard Scientifics to provide flexible financing strategies to current and prospective partner companies, and other potential borrowers, through acquisition of 36% interest in a mezzanine platform

Contacts

Safeguard Scientifics, Inc.
John E. Shave
Vice President, Business Development and Corporate Communications
610-975-4952