Hartford Business Journal

www.HartfordBusiness.com • April 16, 2018 • Hartford Business Journal 7 Reporter's Notebook Matt Pilon | mpilon@HartfordBusiness.com Health Care/Bioscience, Startups & Entrepreneurs, Government/Law and Energy GOVERNMENT Private equity firm made unsolicited XL Center bid I t turns out a private developer may be interested in buying Hartford's XL Center after all. A Chicago private equity firm sent an unsolicited bid to city officials in December offering to pay $50 million for the aging venue and to invest up to $250 million in improvements "such that the property is up to par with top National Hockey League facilities." According to correspondence obtained by the Hartford Business Journal, Oak Street Real Estate Capital LLC contacted Hartford Treasurer Adam Cloud on Dec. 6 with an offer to acquire the venue, which is in need of significant repairs (Gov. Dannel P. Malloy allocated $100 million in his February budget proposal to renovate XL Center, but it's not clear if that funding will be approved). City officials shared the offer with the Capital Region Development Authority, which oversees the venue. CRDA Execu- tive Director Michael Freimuth said he told Oak Street officials they could bid to purchase the building in an upcom- ing RFP that will be out by late June, as ordered by the legislature last year. "As part of our larger plans for in- vestment in the city, we would like to make a preemptive bid on the arena," Oak Street analyst Jared Sheiker wrote to Cloud in December. Oak Street would not comment for this story, but Sheiker's reference to larger plans in Hartford may refer to the firm's offer this month, both to state and city officials, to acquire and leaseback government-owned buildings. Bloom- berg first reported that offer. Details gleaned from Oak Street's correspondence with the city shows that the firm would want a 7.5 percent initial return on the purchase of Hart- ford real estate, including the XL Cen- ter, as well as annual rent increases. Freimuth said CRDA will review the offer, but noted that the state can bor- row money at a lower rate. "It gets to the whole question of how much the private dollars are worth," he said. Oak Street provided HBJ with a com- parison sheet claiming that bonded debt would cost the city more in the long run, even on 5 percent bonds, than its proposed sale-leaseback transaction. Oak Street's XL Center offer last year was facilitated by Westport's Gregory Kraut, a managing partner of K Prop- erty Group in New York. Bloomberg reported that Kraut was also involved in the sale-leaseback offer. Kraut issued a press release several days after Bloomberg's story published calling the sale-leaseback maneuver "a smart measure for desperate times." "The proceeds from the Hartford sales will allow for a citywide bailout and growth, rather than significant increases in taxes and further debt obligation from the state," Kraut said. "The money gained from the state sale could pay for the Teachers' Pension Fund's unfunded liabilities, which would go a long way toward reinvigo- rating our state's financial well-being." Kraut, a Westport representative town meeting member, formed an exploratory committee for statewide office in February, but according to state records, the committee was ter- minated soon after. He also has a campaign website, but he told HBJ he does not intend to run for higher office. HEALTH CARE & TECHNOLOGY New Z-Medica chief eyes focused growth Eric B. Compton has worked for major healthcare companies with bil- lions of dollars in annual sales, such as Johnson & Johnson and Hologic. The recently named president and CEO of Wallingford-based Z-Medica — maker of wound-clotting products — says the 100-employee medical device maker, owned by private equity firm Linden Capital Partners, has big opportunities ahead. "This is a hyper-growth opportunity," Compton said of Z-Medica. "This compa- ny has a history of growing, and I think our best days are still in front of us." What's got him excited is the Food and Drug Administration's September approval of Z-Medica's newest prod- uct, QuikClot Control Plus, a hemo- static dressing that temporarily con- trols severe internal bleeding during surgery or other medical situations. Compton said the approval opens up a new market opportunity for Z- Medica, which is looking to deepen its relationship with hospitals. "Many doctors were hesitant to reach for our products because we didn't have the FDA designation for internal use," he said. Compton said he thinks QuikClot Control Plus is a disruptive product because of its simplicity, safety profile and price compared to other bleeding control technology, such as thrombin. To roll out QuikClot Plus, Z-Medica doubled its U.S.-based healthcare sales- force to 35 people. "A lot of what we'll focus on going forward is that U.S. hospital channel, for sure," Compton said. Compton cred- its his predecessor, Stephen Fanning, who remains on Z-Medica's board, for guiding the company through the two-year FDA process and for the hiring ramp- up that followed. The company's 100-employee work- force has grown from about 55 work- ers when Fanning was hired in 2014. The international market will also be a focus for Compton, as QuikClot Control Plus opens up new opportuni- ties in other countries. A third growth area is selling Z-Medi- ca's bleeding control kits to more public schools and public venues, Compton said. First responders used QuikClot on two victims of the February school shooting in Parkland, Fla., according to Z-Medica. The company said its prod- ucts were also used to treat Louisiana Congressman Steve Scalise, after he was shot at a baseball practice last June, as well as in the aftermath of the Las Vegas concert shooting last October. First responders and others have sent letters to Z-Medica to share their story or thank the company for its product over the years, Compton said. "That's why we feel compelled to do more," he said. "We take it personally." So far, just two public school dis- tricts in Connecticut use QuikClot. "I'd love to see us expand that out as a kind of microcosm of what we should probably be doing nationwide," he said. It's a different sort of distribution channel with its own challenges for Z-Medica, which sells to police depart- ments, first responders, hospitals and the military. The latter accounts for about one-third of its annual revenue, which it declined to disclose. "With what's going on in the world today I think we all feel compelled to figure that channel out," Compton said of schools. Z-Medica CEO Eric Compton with the company's newly FDA- approved product for controlling internal bleeding, QuikClot Control Plus. CRDA Executive Director Michael Freimuth (right) with his director of construction services, Robert Saint, in the XL Center. PHOTO | HBJ FILE HBJ PHOTO | MATT PILON

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