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 Bortech, Inc.
A Vested For Growth Portfolio Company
Leo White, CEO
Keene, New Hampshire
After founding Bortech in 1989 and running it for 12 years, Rees Acheson and Tedd Benson wanted to pursue other interests. But they wanted to find a buyer who would take Bortech to the next level of success while also keeping the company's jobs in New Hampshire and investing in and sharing the profits and decision-making of the company with its employees. Bortech's current CEO, Leo White, was the perfect fit.
Boretech manufactures a patented borewelder utilizing a new welding technique that cuts the repair time of bores from several hours to under an hour. Bores are holes into which pins are inserted to allow parts of machines to pivot or rotate. Over time, the pins wear the holes thin and so the bore walls must then be built up - either by welding the inside of the hole or by inserting a bushing into it. The borewelder's portability allows the machine to repair equipment in the field rather than in repair shops, and its automated process allows it get to bores that hands could not access to create consistency in the welding that was not achievable before.
Recognizing the strength of Bortech's technology, White began looking for a bank loan to finance the acquisition. Bortech's physical assets, however, were small -- primarily consisting of its patented borewelders -- compared to the company's asking price, and many banks were concerned about collateral for a loan. Bortech seemed to be caught in a funding gap -- too risky for debt, but too small for venture capital. Fortunately for Bortech, Vested for Growth, a program of the New Hampshire Loan Fund that provides risk capital of up to $500,000 to small businesses in New Hampshire, was designed to fill that gap.
Recognizing Bortech's growth potential as well as White's commitment to outstanding employment practices, VfG provided $500,000 in the form of debt with revenue participation ($500,000 at 9% over 10 years plus 1.44% of gross sales). With this financing, White took over Bortech in November of 2002. Since then the company has outperformed its peers. While Machine & Tool Industry sales for 2003 declined by 18%, Bortech came within 5% of matching a 10-year sales record. Consequently, their annual participation payment was on target with VfG's pricing projections giving VfG a 14.3% IRR after one year with a trajectory to achieve a 20% IRR at the end of 10 years.
VfG also offers a "good driver" discount that is tied to mission progress relating to new initiatives that engage employees. Bortech put a profit sharing plan in place and conducted financial training for all employees so that they can understand how their jobs connect to the companies' bottom line. Accordingly, the company earned the $3,500 good driver discount for its first year, and they have chosen to add it to their profit sharing pool. In addition the company added two new assembly and technical support positions that allowed them to hire two people whose formal education ended in high school. Bortech also added short-term disability benefits and term life insurance to all employee benefits. A solid first year in both social and financial returns.
Vested for Growth Profile
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