Peter Kelsey, a college dropout and one-time busboy who built the New French Bakery over nearly 20 years to 300 employees and $40 million in revenue, has sold the company for an undisclosed amount to an Illinois private equity firm that specializes in food-and-beverage concerns.
Kelsey, 56, said Tuesday that he sold for unspecified millions partly because he couldn't get large banks to lend him $6 million to add the equipment and people for another production line. The company generated $2 million in cash flow in 2012. He didn't dispute a sale price of more than $10 million.
After his primary lender, Northeast State Bank, told him that it would have to spread additional debt over several other small lenders, Kelsey said he concluded that he needed an equity investor.
He turned to Chicago-based Arbor Investments, which has $600 million invested in about 30 food-and-beverage companies.
"I was looking for an investor and these guys came along and said, 'We don't want to invest, we want to buy,' " Kelsey said. "I have to think about these 300 people and I usually just do what I want. It was time to get out of the way."
The New French made its name in artisan breads, and operates seven days a week from two Minneapolis plants that bake about 3 million pounds of bread a month.
It provides fresh bread to 150 Minnesota customers, including the Minneapolis Club, Surdyk's, Lunds, Target and the St. Paul Hotel. It also sells around the country.
Kelsey, who survived cancer several years ago, said an expansion would be risky without deeper pockets. And New French had a couple close calls over its thinly financed history.
