November 20, 2014 / 7:45 PM / 5 years ago

Warranty service firm Interstate National mulls sale to Lightyear -sources

Nov 20 (Reuters) - Interstate National Corp, a Golden Gate Capital portfolio company and warranty service provider, is in discussions to sell itself for at least $200 million to Lightyear Capital, according to people familiar with the discussions.

Negotiations are still ongoing between Golden Gate and Lightyear and the deal may still fall apart, the people said, asking not to be named because they were not authorized to speak on the record.

One hurdle in the lengthy auction process has been legal proceedings related to “robocalls,” the people said, without giving details.

Royal Bank of Canada has been working since the summer on the sale of Atlanta, Georgia-based Interstate National. The auction attracted other private equity bidders including Corsair Capital LLC and ABRY Partners, the people said.

Representatives for RBC, Golden Gate and Corsair declined to comment. Representatives for Interstate National, and ABRY did not immediately respond to a request for comment.

The deal could be priced at nearly nine times Interstate National’s earnings before interest, tax, depreciation and amortization of $20 million to $30 million per year, the people familiar with the negotiations said.

Interstate National provides extended warranties and vehicle service contracts to new and used vehicle owners in North America through a network of agents and car dealerships.

Golden Gate completed its investment in Interstate National Dealer Services Inc in 2006. The company, founded in 1980, later changed its name to Interstate National. The size of Golden Gate’s investment was not disclosed at the time of the 2006 deal.

New York-based Lightyear Capital has several investments in middle-market financial services companies. (Reporting By Mike Stone; Editing by Tom Brown)

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