The Sterling Group, L.P. Announces Acquisition of CST Industries, Inc.


HOUSTON (August 11, 2006) – The Sterling Group, L.P. (“Sterling”), a Houston-based private equity firm, today announced that it has finalized the acquisition of CST Industries, Inc. (“CST”) from CSTI Holdings LLC, an entity controlled by Don Wagner, CST’s President and CEO, and George K. Baum Capital Partners, L.P., a Kansas City, Missouri-based private equity fund.

Headquartered in Kansas City, Kansas, CST is a leading global manufacturer and erector of factory coated metal storage tanks. The Company’s comprehensive product offering includes bolted and factory welded tanks for use in a wide variety of applications, aluminum geodesic domes, and agricultural feed and waste storage systems. CST serves numerous end markets including water, wastewater, fire protection, oilfield, agriculture, industrial liquid, plastics, chemicals, minerals, food, construction materials and energy. CST’s manufacturing facilities are located in Parsons, Kansas; DeKalb, Illinois; Winchester, Tennessee; and the United Kingdom.

“This company and its predecessors have manufactured tanks for over 100 years, and we intend to continue to support management in their growth plans,” said Frank Hevrdejs, Chairman of Sterling. “We have great respect for Don Wagner, Ron Stier and the company they have built, and are excited about the opportunity to partner with CST’s management team, which has proven its ability to grow the business globally by expanding sales of the company’s tanks into new markets.”

“CST has had success in growing its business because of its great employees and the advantages of its products,” said Mr. Wagner, who has been the President and CEO of CST and its predecessor since 1990. “Ron Stier has been an integral part of the company for nine years and is well prepared to lead CST to the next level. This company is a great platform for growth, and with the financial and operating assistance of the Sterling Group, the future is very bright.”

“It’s an exciting time for our business and we are looking forward to our partnership with Sterling. We clearly share a common vision of growing our business through satisfying our customers across our many markets,” said Ron Stier, the recently-promoted CEO of CST. “Don has been instrumental to the success of CST and, personally, a great partner. We are pleased he will continue to be active on our Board providing continued support to our management team.”

The acquisition was financed primarily with equity from Sterling Group Partners II, L.P., as well as a significant reinvestment by the CST management team. BNP Paribas arranged debt financing for the transaction.

About The Sterling Group, L.P.
The Sterling Group (www.sterling-group.com) is a private equity investment firm founded in 1982 that targets controlling interests in basic manufacturing, industrial services and distribution companies. Typical enterprise values of these companies range from $100 million to $500 million. Sterling has sponsored the buyout of 30 portfolio companies and numerous add-on acquisitions for a total transaction value greater than $7 billion. Currently, Sterling has $600 million of committed capital under management. Current portfolio companies include Panolam Industries, North American Construction Group and Propex Fabrics.

For additional information:
The Sterling Group, L.P.
Kevin Garland
(713) 877-8257
kgarland@sterling-group.com