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New $75 Million Mezzanine Fund Quickly Attracts Institutional Investors

10/13/2003
FOR IMMEDIATE RELEASE

King of Prussia, PA – October 10, 2003 A new mezzanine investment fund, run by the former management team of Mellon Bank’s Growth Finance group, announced that it has closed on $60 million, with an additional $15 million in capital commitments. The fund, called Merion Investment Partners, L.P expects a total of $100 million by the end of the year.

The continuity of bringing the entire Mellon Growth Finance team to the new entity has created immediate credibility within the investment community. Already, Merion Investment Partners has attracted significant participation from key institutional investors, including Fleet Bank, Wachovia Bank, MBNA, Philadelphia Insurance Company, First Financial Bank, and the City of Philadelphia Pension Fund.

The fund was established to provide non-control mezzanine capital with minimal equity dilution to successful middle market companies in the Mid-Atlantic region. Mezzanine financing is the “middle ground” of a company’s capital structure that is between senior debt and common equity. It is especially useful for growing companies that have reached the limits of their bank borrowing capacities. Properly structured mezzanine financing is regarded as equity by senior lenders, but minimizes equity dilution for the shareholders.

The partnership, headed by the former Mellon team, also includes Brian O’Neill, chairman and founder of the O’Neill Properties Group, who is providing the fund with administrative offices, infrastructure and additional access to financial relationships and deal flow. Bill Means will serve as the fund’s managing partner. The fund is located in The Merion Building in King of Prussia.

“We feel that this is an ideal time to create a fund of this type,” said Means. “Today’s market is poised for growth. Historically, this part of the economic cycle has proved to be the perfect window for establishing an investment fund. This is the period which enables dynamic wealth creation.”

During its successful six-year tenure with Mellon, the team achieved an internal rate of return (“IRR”) of over 30 percent. That is significantly higher than the industry targeted IRR, which is typically in the high teens to the low-20s. The management team has built a reputation for wisely and safely supporting regional entrepreneurs, including work with Crothall Services, NCO Group, and PSC Info Group.

The Small Business Administration has licensed the Fund as a Small Business Investment Company (SBIC). That designation means that for every dollar Merion raises from private investors, it receives two dollars from the SBA.

Investing Philosophy Merion Investment Partners employs an “old-money” investing philosophy, concentrating on high growth markets in transition. These include business services, specialty manufacturing, and health care services and products. The primary focus of the fund is growing firms in the Mid-Atlantic region with at least $10 million in revenue. The Fund provides subordinated debt of $2 – $5 million per investment for middle market companies. This fund will also occasionally provide equity co-investments in conjunction with a subordinated debt investment.

“While this is a new investment fund, the management team we have in place has a rich history of smart investments,” said Ed Rodgers, Principal, Merion Investment Partners. “Institutional investors have recognized this, and we have therefore been able to gain remarkable traction in a short period.”

The Fund provides all portfolio companies with local personal attention, a rarity in today’s consolidated banking world.

About Merion Investment Partners, L.P. Founded in 2003, Merion Investment Partners LP is a mezzanine capital fund licensed by the Small Business Administration (“SBA”) as a Small Business Investment Company (“SBIC”). Merion invests mezzanine debt with equity features in companies that have strong growth potential, proven management teams, a strategic competitive advantage and/or are operating in sectors of the economy that are poised to exhibit growth.

Collectively, the principals of Merion Investment Partners have decades of experience in venture capital, commercial banking, investment banking, operating management and entrepreneurship. The company is headquartered in The Merion Building in King of Prussia, PA. It can be reached on the Web at www.merionpartners.com

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