September 27, 2006 By Paul Ziobro Dow Jones - LBO Wire Food & Beverage TSG Consumer Partners and other investors have sold GFA Brands Inc., which makes healthy spreads and organic food products under the Smart Balance and Earth Balance names, to blank-check company Boulder Specialty Brands Inc. for about $465 million. TSG, which bought a stake of unknown size in the company in 2004, will likely earn a nice return on the sale, which is expected to close in 90 days. While it is not known how much equity the firm invested in GFA Brands, it generally invests up to $100 million toward each deal. Through a spokesman, the firm declined to comment on the transaction. GFA Brands makes healthy food products from a blend of natural vegetable oils developed by Brandeis University. Its product line currently includes margarine, popcorn, mayonnaise, peanut butter and cooking oils, as well as certain national and organic foods under the Earth Balance brands. Its blank-check company buyer raised about $102 million in an initial public offering last year. To fund the purchase, Boulder will be selling $107.5 million of common stock. Institutional investors, including funds affiliated with Och-Ziff Capital Management Group, have also agreed to purchase $138.5 million worth of Boulder's Series A convertible preferred stock and warrants. Boulder Specialty Brands, which intends to change its name to Smart Balance Inc. once the deal closes, was founded by food and beverage industry executives to buy companies in the sector. It is headed by Stephen B. Hughes, who was chief executive of Celestial Seasonings from 1997 to 2000, when the company was sold to Hain Food Group. TSG Consumer Partners, which was founded in 1987 and was formerly known as the Shansby Group, focuses on investing in middle-market, consumer product companies. It has offices in San Francisco and New York. Most recently, the firm sold its stake in Energy Brands Inc., which makes enhanced water products under the vitaminwater, smartwater and fruitwater names, to India's Tata Tea Ltd. for $677 million. The firm last raised a fund in 2002, when it closed TSG4 LP, a $510 million partnership. Bank of America NA and Banc of America Securities LLC are also providing about $180 million in debt to fund the purchase. Citigroup Global Markets Inc. served as financial advisor to Boulder, and Davis & Kuelthau SC, Ellenoff Grossman & Schole LLP and Foley & Lardner LLP provided legal counsel. Banc of America Securities LLC and Centerview Partners LLC were financial advisors to GFA Brand, with Ropes and Gray LLP providing legal counsel. Reach TSG Consumer Partners at 415-217-2300. http://www.tsgconsumer.com http://www.smartbalance.com Copyright © 2008 TSG Consumer Partners. All Rights Reserved.