Green Mountain Capital will cease operations
Green Mountain Capital LP, a Vermont Small Business Investment Company founded 16 years ago as part of the Dean administration's efforts to stimulate investment in Vermont's small businesses, announced that it will be winding down in 2010 after making a year-end 2009 cash distribution to its partners. With this distribution, the investors will have received more than double the capital they contributed to the Fund. Over the course of its operations, GMC created and/or saved more than 700 jobs in Vermont and provided $13 million in essential financing to 14 Vermont companies plus 14 other firms in northern New England.
The State of Vermont Municipal and State Employees Pension Funds were major investors in Green Mountain Capital (GMC). State Treasurer Jeb Spaulding said, "I am very pleased that our investment not only saved and created jobs in Vermont, but also produced a positive rate of return – a return better than the average of other US mezzanine financing funds started in the same time period."
Green Mountain Capital’s investors were initially supported by a guarantee from the State of Vermont of one-third of their total investment. That guarantee was never called on, and expired last year. Michael Sweatman of Stowe, VT was one of the founders of Green Mountain and served as President of its General Partner, Catamount Capital, and as GMC’s General Manager throughout the life of the partnership. The other co-founders were Wayne Granquist of Weston, VT and Charlie Kireker of Weybridge, VT. Reg Gignoux of Shelburne, VT, also served as a Director of the General Partner.
Mr. Granquist, who served as Chair of the firm's General Partner, said, “With the help of the government of Vermont and the US Small Business Administration, we were able to put our investors' funds to work in several new and some existing northern New England businesses. Green Mountain supplemented, or in some cases replaced, banks that were unable to meet the demands of their clients for additional capital. We were able not only to save jobs, but to accelerate the growth of several significant enterprises that would not otherwise be here today. At the same time, we did so giving a positive, competitive return to our investors. It's been a win-win-win for Vermont, Northern New England and our investors.”
Background on Green Mountain Capital, L.P.:
In 1991, the Vermont Legislature enacted legislation (the “VSBIC Act”) to increase the amount of investment capital available for small businesses in Vermont by providing a guarantee of up to $1,000,000 of the capital invested in a new Vermont Small Business Investment Company (“VSBIC”). Green Mountain Capital, L.P. ("GMC”) was formed for the sole purpose of seeking and obtaining approval by the State of Vermont as the VSBIC, whereupon it was licensed by the US Small Business Administration as a Small Business Investment Company (“SBIC”). The state guarantee proved helpful for purposes of raising investment capital at the outset, during the recession of the early 1990’s, but it was never called upon and expired in 2008.
GMC's business plan, which was approved by the State, aimed at a goal of increasing loans to or investments in Vermont small businesses, taking into consideration the following criteria wherever possible: geographic distribution, economic diversity, potential for success, potential for jobs creation, innovative enterprise and/or entrepreneurial spirit. In accordance with the provisions of the legislation, such loans or investments were to account for no less that 33.3% of GMC’s activity. In actuality, Vermont loans and investments represented approximately half of the investments made and capital deployed.
A Business Review Committee of representatives from the investors, including the State of Vermont, met quarterly with the management and directors of GMC. The committee was responsible for reviewing GMC’s performance and assuring compliance with the conditions attached to the State guarantee. Annual reports covering the activities of GMC were submitted to the State's oversight group.
GMC raised a little more than $3 million in paid-up capital in 1993 from 44 investors, most of whom were Vermont residents or institutions. As an SBIC, GMC was able to borrow long-term debt from the SBA, while being supported occasionally by short-term borrowing from the Howard Bank (now TD Bank), enabling GMC to turn over its original invested capital of $3 million more than fourfold. GMC was therefore able to invest nearly $13 million into 28 small businesses, half of them in Vermont, and the remainder in New Hampshire and Massachusetts.
Source: Green Mountain Capital. 12.21.2009.