“Toto, I’ve a feeling we’re not in Denver anymore.” Well, the Atlanta office is up and running and, along with Denver, busy!

In May, we completed the firm’s first investment in the South East, a $6.2 million equity investment as a part of the recapitalization of CanGen Holdings. Headquartered outside of Atlanta, Georgia, CanGen supplies highly engineered wear parts, including feed screws, barrels, cross heads and check valves, to extruders and injection molders of plastic and rubber products. CHB partnered with existing management to buy out the Company’s majority owner and support the Company’s continued growth.

We had a second close of $50 million, in aggregate, on CHB Capital Partners III in May. We are in discussions with a number of additional institutional investors and expect to have a final close in the 4th quarter.

With a welcome assist from a strong economy, our portfolio companies may be even busier than we are. HiRel Systems, a Minnesota based manufacturer of custom magnetics and power supplies, is on track to end the year up 25% over last year, in part due to the acquisition of ZMAN Magnetics, which the company closed in October, 2004. HiRel continues to invest in its infrastructure and now has facilities in China, the Dominican Republic and the US.

After another record year in 2004, Alternative Technology, a Denver based distributor of software and hardware for a variety of edge network applications, is on pace to grow 30% again in 2005.

CT Systems spent the last several months taking a hard look at a number of small cable and wire harness and electromechanical integrators and assemblers in the Midwest. The Company continues to seek small acquisition candidates in that area with revenue of $3 to $15 million where CT Systems can leverage their existing operating infrastructure.

Micro Dynamics continues to expand and grow rapidly. In May, the company completed the acquisition of Logic PD, a Minneapolis-based product design and engineering firm. The acquisition of Logic allows Micro Dynamics to provide its OEM customers with a complete soup-to-nuts EMS service offering from product design and engineering to manufacturing and fulfillment.

We encourage you to call us with interesting investment opportunities within the closely held and family owned business market. We look for transactions where we can invest equity capital in established companies with $10 million or more in revenue. Should you call, we guarantee you a thoughtful and timely response.

Tad Kelly, John Flanigan, Blake Morris, Grant Clayton, Sean McClenaghan, Steve Greene, Frederick Antwi, Amy Mulkey, David Anderson & Andrea Kasper

511 Sixteenth Street, Suite 600, Denver, CO 80202
P: (303) 571-0100   F: (303) 571-0114

75 Fifth Street NW, Suite 1025, Atlanta, GA 30308
P: (404) 806-7520   F: (404) 806-7530