NewSpring Capital Announces First Closing On NewSpring Mezzanine Capital, L.P.

KING OF PRUSSIA, Pa., Oct. 21 /PRNewswire/ -- NewSpring Capital, a family of specific purpose private equity funds focused on the Mid-Atlantic region, announced today the first closing of its newest fund, NewSpring Mezzanine Capital, L.P. with initial commitments of $40 million. NewSpring Mezzanine Capital is targeted to be a $100 million fund upon the completion of fundraising in mid-2005.

NewSpring Mezzanine Capital, L.P. is the third fund launched by NewSpring Capital, joining sister funds: NewSpring Ventures, L.P., a venture capital fund providing equity capital to growth and expansion stage companies with a focus on information technology, business services, and healthcare; and Commerce Health Ventures, L.P., a healthcare venture fund focused on biopharmaceuticals, medical devices, and healthcare service companies. NewSpring Capital, with the addition of NewSpring Mezzanine Capital, now manages more than $200 million of private equity capital.

NewSpring Mezzanine Capital is led by partners - Michael A. DiPiano, Steven D. Hobman, Marc R. Lederman and Brian G. Murphy. In addition, Andrew P. Panzo, will be joining the management team as a Venture Partner.

NewSpring Mezzanine Capital is a mezzanine private equity fund focused on late stage and buy-out opportunities in information technology, healthcare, business services and specialty manufacturing. The fund will be focused on investment opportunities in the Mid-Atlantic region, from Northern Virginia to Metro New York and west to Pittsburgh, PA. The fund will lead and co-invest with investment syndicates in both equity sponsored and non-sponsored deals. The fund's investment target size is $2 million to $5 million per transaction.

"Our fund is well positioned to take advantage of the shortage of mezzanine capital focused on the sub-$10 million transaction size in the Mid- Atlantic Region," commented Steve Hobman. "NewSpring Mezzanine Capital has been well received in the market and our deal flow pipeline is building rapidly. In fact, the fund has had to pass on several opportunities pending this initial close, including RecoverCare, LLC, a $5 million mezzanine transaction funded by NewSpring Ventures, L.P. and Commerce Health Ventures, L.P. in October 2004. We currently have two mezzanine transactions under term sheet."

NewSpring Mezzanine Capital has applied to be a licensed Debenture Small Business Investment Company. The fund has received its "Go Forth" letter from the U.S. Small Business Administration ("SBA") and anticipates final licensure approval in the next 90 days. The fund may make pre-licensure investments immediately and expects to close its first investment in the fourth quarter of 2004. The $40 million commitment includes the anticipated capital leverage match from the U.S. Small Business Administration.

"We are extremely pleased that the SBA has accepted NewSpring Mezzanine Capital as a Debenture Small Business Investment Company applicant and look forward to receiving final approval later this year," said Mike DiPiano. "The SBA's stringent criteria for investment manager selection and detailed due diligence process are well known. The fact that they have selected NewSpring Mezzanine Capital as an applicant speaks to the strength and track record of our team and to the strong relationship we have developed with the SBA with our existing licensee fund, NewSpring Ventures, L.P."

ABOUT NEWSPRING CAPITAL

NewSpring Capital, based in King of Prussia, PA, is a family of specific purpose private equity funds, with over $200 million under management, focused on the Mid-Atlantic region. The family of funds includes, NewSpring Ventures, L.P., a venture capital fund providing equity capital to growth and expansion stage companies with a focus on information technology, business services, and healthcare; Commerce Health Ventures, L.P., a healthcare venture fund focused on biopharmaceuticals, medical devices, and healthcare service companies; and NewSpring Mezzanine Capital, L.P., a mezzanine private equity fund focused on late stage and buy-out opportunities in information technology, healthcare, business services and specialty manufacturing.

NewSpring Capital

CONTACT: Steven D. Hobman, Partner of NewSpring Capital,+1-610-567-2384, steve@newspringcapital.com

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