New Season for an Old Sew-and-Sew
By Kevin Kipp
St.
Louis Embroiderer has new life.
Considering
how many people find joy and destiny in a career after downsizing,
it's almost surprising that "jobs saved" is a good-news headline.
Oh
well, everybody wants to get to heaven. Nobody wants to die.
Nonetheless,
for almost 50 employees at St. Charles-based St. Louis Embroidery
(near Highway 94 and Friedens Road), it was good news that a public-private
partnership swung a deal to keep the company operating.
Greg
Prestemon, president of the Economic Development Center of St.
Charles County, explains "These are people with very specific
skills, very valuable skills that just aren't very transferable.
The alternative could easily have been unemployment and considerable
hardships."
The
partnership players were the EDC's Industrial Development Authority
and its tax-exempt mini-bond program, Enterprise Bank, and entrepreneur
Jim Zimmerman.
Zimmerman,
himself an Angelica Corp. downsizing refugee in March 1996, bought
the 112-year-old embroidery outfit from Cincinnati-based Cintas
Corp. last fall.
The
deal was financed in part with a $900,000 IDA bond, bought by
Enterprise Bank.
The
union-shop stitchery, according to Zimmerman, produces "every
sleeve emblem in Major League Baseball. We've been doing them
for the last 32 years."
Zimmerman
rattled off the clubs, including the Pirates, Braves, and rival
Cubbies, and on the junior circuit, the Yankees, Rangers, both
AL Soxes. Plus World Series patches.
St.
Louis Embroidery also does a lot of Harley-Davidson work. In their
long history they designed the first Boy Scouts emblem (unveiled
by Ike in the '50s) the Exxon tiger, and the first 7-Up logo.
Despite
its illustrious heritage, Zimmerman says, arranging the deal presented
challenges that occasionally looked insurmountable. Start with
the elephant-and-gnat ratio: "Cintas does $1.6 billion a year.
St. Louis Embroidery never did more than $3.5 million. To them
this company was a rounding error."
And
he grants that even with tax-exempt status, the bond was hard
to sell: "Had Enterprise said 'no,' I was to the point of giving
up. How many times can you give the same presentation?"
In
fact, tying up with Enterprise was mere coincidence. According
to Kennedy Hudson, commercial banking officer at the bank, Zimmerman's
attorney is Terry Burnett of Menes, Whitney & Burnett. The
Clayton-based law firm is an Enterprise client. These guys talked.
It
was a longer shot still that Zimmerman heard about St. Louis Embroidery's
availability in the first place.
He
had started his own company, Zimmerman & Associates Uniforms,
in July 1998. "As a matter of necessity," he explains, "I had
to start my own embroidery company for custom jobs. And so I invested
$100,000 in equipment and software and so forth to create Universal
Embroidery."
He
was operating out of the West County Enterprise Center incubator,
where Tayman Medical is also located. "The president's father
has for the last 25 years sold backings to St. Louis Embroidery,"
Zimmerman says. "During a sales call, the dad heard that Cintas
had just acquired Unitog [erstwhile owners of St. Louis Embroidery]
and let it be known that they would either sell it [the embroidery
unit] or close it. He told his son to tell me about it."
Let
the games begin.
Mark
Diliberto, senior lender at the EDC, "It's one of those friend-of-a-friend-of-a-friend
networking scenarios, including Nadine Boon [director of Economic
Development for the city of St. Charles] who played a significant
role as facilitator of the process.
"It
also illustrates the benefits of the mini-bond program, which
is geared to manufacturing," he says.
"These
are standardized loan documents that aren't negotiable. It's analogous
to getting a car loan; you don't need an attorney to handle that.
It's an oversimplification, but there's a lot of take-it-or-leave-it."
Simplified
documentation allows for quicker review, which allows all the
parties to the transaction to cut their fees, including the attorneys
and the IDA, Diliberto says.
Prestemon
says, "We created a streamlined process that makes the Industrial
Revenue Bond affordable and accessible for smaller projects like
these. In the bond world, a million dollars is really a small
amount. But for the new owners and about 50 families, it's the
difference between having a livelihood and being in financial
straits."
Hudson
from Enterprise enumerated the program's virtues for other participants.
"It's attractive to the borrower, because the rate is low. It's
attractive to the bank, because the interest on the bond is tax-free."
Hudson
liked the opportunity for other reasons: Zimmerman's experience,
the company's tradition, the opportunity to preserve jobs. Besides,
the apparently baseball-conscious banker says in an energetic
tone, "It's a neat company. Do you know what they make?"
He
adds that while a $900,000 bond purchase didn't come close to
reaching any internal limits at Enterprise, "It shows up on the
radar screen at a bank our size." (Enterprise has roughly
$500 million in assets.)
Zimmerman,
who displays the oratorical gifts of one who talks dogs off meat
wagons, acknowledged that the IDA bond was a lynchpin to swinging
the deal. Otherwise he is close to the vest about specifics.
He
allows this much. "We ended up with $2.4 million worth of assets,
but that's not what we paid."
Prestemon,
summarizes what he likes best about the deal, "We saved some jobs
that probably would have left Missouri and the United States forever.
It was one of the most gratifying small business projects I've
ever been involved with."
Kevin Kipp runs Bubble Communications, a creative services and
community relations firm in St. Charles.
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