By Dan McCue
Staff Writer

The head of the New York investment firm that bought American LaFrance from DaimlerChrysler’s Freightliner LLC has told the company’s 470 workers that she has no intention of moving the company.

In fact, Lynn Tilton, founder and chief executive officer of Patriarch Partners LLC, held a meeting with employees and told them that location and the existing workforce were two of the principle reasons her equity investment partnership became smitten with the company.

“I want to be as direct as possible on this; North Charleston wants us to stay, and we want to stay in North Charleston, ” Tilton said when asked about the company’s future. “The people we have here are going to be critical to American LaFrance’s transition from subsidiary to stand-alone entity in its own right.”

Under the deal announced Dec. 15, Patriarch Partners will maintain American LaFrance’s manufacturing facilities and corporate-owned dealer locations across the United States.

Not part of the deal is the Ladson corporate headquarters building, which remains a DaimlerChrysler asset. DaimlerChrysler recently announced it is dedicating the Ladson facility to the assembly of the next generation of Dodge Sprinter van, but the facility will continue to be used in part by American LaFrance until mid-2007.

At that point, Tilton said, the company will “sidestep” into another facility close to its present home.

“We want to stay right here,” she said, suggesting American LaFrance’s future address may well be the same business park it now calls home.

Patriarch Partners currently provides portfolio management services to eight leverage funds and a private equity fund, which finance and manage a diverse portfolio of international companies.

The partnership’s aggregate asset value is approximately $5 billion, including equity ownership in more than 65 companies, the majority of which it acquired after periods of operational, industry or economic turmoil.

Its business model, one Tilton said she owns a U.S. patent on, has been described as “one that seeks to restructure or reorganize the greater proportion of the companies in its funds’ portfolio to allow borrowers the time, liquidity and strategic support to turn their operations around.”

Patriarch Partners began investigating the acquisition of American LaFrance last May, when it was contacted by Donnelly, Penman & Partners, a Michigan-based investment banking firm that frequently works with DaimlerChrysler’s mergers and acquisitions division.

Tilton said subsequent discussion with the principles at both Freightliner and American LaFrance lead her to believe the company had everything she looks for in a potential investment.

In addition to its workers, Tilton cited, “(American LaFrance’s) great history, customer-centered corporate philosophy and the passion—an almost cult-like feeling—it has for its product.”

An active owner

While John Stevenson will be retained as American LaFrance’s president, Tilton said Patriarch Partners will play an active role in the future management of the company.

“Patriarch Partners plays a duel role in the companies it acquires,” she explained. “Financially, that means the provision of capital. But we also have a strong management group whose goal is to expand the company’s horizons through greater efficiencies and innovation.”

Job one at American LaFrance, Tilton said, is to help Stevenson assemble a team—comprised of current American LaFrance executives and outsiders—to address unspecified shortcomings and enhance the company’s profitability.

Keeping the company

She drew a line, however, when asked if selling American LaFrance assets might be part of the equation.

“When we invest in a company, we take all the assets we can get our hands on,” Tilton said. “We don’t buy parts of companies, and we don’t buy them with the intention of selling off limbs.

“The way we look at it is we’re taking a company, a whole company, into the future, from it’s being in transition to a place of light and prosperity.”

Tilton was equally emphatic on the question of whether Patriarch Partners might turn around and sell American LaFrance when its value as a company rises.

“Will we ever sell American LaFrance? Perhaps. Will we ever take it public? Perhaps. But as I told our workers this morning, I never have an end game,” Tilton said. “Our funds are typically 15 year funds, and we’re in this for the long haul.”

Freightliner’s role

Also in it for the long haul is Freightliner. Although Freightliner and American LaFrance are now separate business entities, Tilton said a complete transition to self-sufficiency will take five to six years.

“We wouldn’t have done the transaction if Freightliner wasn’t committed to American LaFrance’s success,” Tilton said.

Stevenson said the biggest immediate difference in day-to-day operations is that American LaFrance’s management team will be able to quickly make decisions about what products the company makes and what markets it gets into.

“That said, Freightliner will be a transition partner and important supplier to American LaFrance for a long time to come,” he said.

Chris Patterson, Freightliner’s president and CEO, said Patriarch’s strategic expertise aligns well with American LaFrance’s loyalty and commitment to its customer base.

“We believe that under Patriarch’s guidance, American LaFrance will grow market share, achieve greater profitability and become a stronger partner to the fire and EMS community.”

Becoming larger

Founded in 1830, American LaFrance is the fifth-largest manufacturer of emergency vehicles in the United States. Both Tilton and Stevenson said their goal is to have it move up the list to second or third largest by the end of 2007.

“Part of achieving that goal was accomplished today,” Tilton said. “A big part of this business is service and spare parts, and when there’s uncertainty about a company’s ownership, that tends to give prospective customers pause.”

“I think now that American LaFrance has a new owner, those concerns will turn around very quickly.”

Stevenson said American LaFrance actual sales for 2005 are 18% above its market projections, due in part to recent sales of equipment to the cities of San Francisco and Los Angeles.

Dan McCue is a staff writer for the Business Journal. E-mail him at dmccue@charlestonbusiness.com.

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