Blue Wolf Capital Forms Healthcare Laundry Systems to Serve Hospitals and Clinics in Greater Chicago Area.

Acquires Assets of Hospital Laundry Services and Northern Illinois Hospital Services; Creates New Company, Largest Provider of Healthcare Laundry Services in North America 

NEW YORK -- Blue Wolf Capital Management LLC ("Blue Wolf"), the New York-based private equity firm, today announced the establishment by Blue Wolf Capital Fund II, L.P. of Healthcare Laundry Systems ("HLS"), a company that provides laundry services to hospitals and clinics in the greater Chicago area. Blue Wolf also announced the acquisition of the assets of Chicago-based Hospital Laundry Services and the assets of Northern Illinois Hospital Services, based in Rockford, Illinois, each from a consortium of not-for-profit hospitals. As a result of the transactions, HLS will be the largest and highest-volume provider of healthcare laundry services in North America. Terms of both transactions were not disclosed.

HLS is headquartered at Hospital Laundry Services's state-of-the-art facility in Wheeling, Illinois, just outside of Chicago. The new company will be led by Hospital Laundry Services's former management team. Combined, the two companies will employ about 20 percent more people than Hospital Laundry Services, and will be the largest hospital laundry facility in the U.S., serving more than fifty million pounds of clean linen annually to over 50 hospitals and six hundred clinics in the greater Chicago area.

"HLS is the first investment made by Fund II, and we are pleased to bring this great company into our portfolio," said Josh Wolf-Powers, a Founding Partner of Blue Wolf. "This transaction exemplifies Blue Wolf's ability to solve the complex problems of sellers: In addition to working closely with HLS's first-rate management, we worked constructively with multiple labor unions, including UNITE HERE and the International Brotherhood of Teamsters, to assemble a transaction that will provide the best possible outcomes for all of the company's stakeholders."

"We look forward to investing in and growing this business, as we continue to provide our customers with an exceptional level of service," Wolf-Powers concluded.

The acquisitions were funded with equity investments from Blue Wolf Capital Fund II, L.P. and the management team, vendor financing, a sale-leaseback of HLS's facility to Cabot Properties, Inc., and term and revolving credit from National City Bank. Haran Narulla, Vice President of Blue Wolf, said, "Cabot and National City each stuck with us, over a very long transaction process, and revealed themselves to be solid transaction partners with whom we hope we are able to work again soon."

Concurrent with the transaction, HLS has entered into long-term management service agreements with Crothall Services Group, a national leader in healthcare services management, which has provided management services to Hospital Laundry Services for three years, helping the company establish its market-leading position.

Chuck Rossmiller, Crothall's unit director for HLS, who led Hospital Laundry Services and will continue to lead HLS, said, "Blue Wolf has been a terrific partner, and has stood solidly with us through the capital markets turmoil of the past several months. With every challenge that has been thrown before us - whether by an extraordinarily complex transaction, or by the markets - Blue Wolf partnered with us and worked with the various sources of financing, and with the seller, to keep the transaction alive."

Adam Blumenthal, Managing Partner of Blue Wolf, said, "This transaction perfectly exemplifies our investment strategy: we worked closely with the sellers to assure a seamless transition to new, long-term relationships, we renegotiated multiple labor agreements to assure long-term stability for the business, we've partnered with a premier operator and a premier vendor to assure top-quality service, and we've begun to implement our strategy of growth through acquisition effective on the very first day of our ownership."

About Blue Wolf

Blue Wolf Capital Management LLC is a private equity firm that invests in companies in which effective management of relationships with complex constituencies, such as government and labor, can change organizations and create value. The HLS investment is the first investment by Blue Wolf Capital Fund II, L.P. For additional information, please visit www.blue-wolf.com.