Investor sells stake in Delano heating firm

  • Article by: NEAL ST. ANTHONY , Star Tribune
  • Updated: April 13, 2012 - 10:29 PM

Arctic Fox's industrial warming equipment is used in oil fields around the world.

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President Jack Veach leads Delano-based Arctic Fox, which makes equipment for global oil-field operations.

Private equity firm Spell Capital Partners struck a gusher through its ownership of Delano-based Arctic Fox, where business and employment are growing thanks in part to the booming oil-and-gas business from North Dakota to Russia.

Minneapolis-based Spell Capital has sold a majority of the company to an Indiana-based concern that promises no major changes.

"We're a global supplier of warming equipment that is used in the oil and gas exploration industry," said President Jack Veach, 52, who remains a minority investor in the company. "North Dakota has been a play but we have a lot of business in Colorado, Wyoming ... as well as Belarus and Russia. We're all over the planet."

Arctic Fox equipment heats oil-field batteries, piping, hydraulic and fuel systems, as well as off-road equipment, and keeps diesel-powered fleets operating more efficiently in the winter.

Veach, whose family founded Arctic Fox in 1979, credited his workers, a smart diversification plan and solid execution with great recent results.

Under Spell Capital's ownership, Arctic Fox nearly tripled operating profits to $8.1 million over the last five years on revenue that more than doubled to $29.7 million.

Employment grew from 80 to 140. There were layoffs during 2008-2009 that have since been reversed.

The company is running round the clock at its main plant in Delano. In addition to the oil-services business, Arctic Fox makes heating systems for truckers and hydraulic equipment.

Jim Rikkers, a managing partner at Spell, which takes long-term positions in manufacturers and works with management to improve the businesses, said Arctic Fox was one of Spell's best investments in recent years and a great company with good management.

Private equity firms, which raise funds from individual and institutional investors, typically try to improve performance and get their money out in three to six years.

Majority interest in Arctic Fox was purchased by North River Capital of Fort Wayne, Ind., another private equity firm, for an unspecified price.

"We're very pleased to have Arctic Fox join our growing portfolio of companies focused on core industrial activities," said Danny Rifkin, a principal of North River Capital, in a prepared statement. "Arctic Fox has an outstanding reputation, a history of innovation, and a demonstrated ability to produce solid financial results, even in volatile periods."

North River said all employees will be retained in a "seamless transition."

Arctic Fox also operates a contract manufacturing business that supplies large manufacturers with steel and aluminum tubing for products that range from snowmobiles to paint sprayers.

Neal St. Anthony • 612-673-7144

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