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If Onex Corp. manages to complete the sale of Husky Injection Molding Systems for $2-billion (U.S.), as it's reportedly in talks to do, it will be a tidy triple in a little more than three years.

And in typical Onex fashion, it wasn't a financial-engineering and leverage driven return. Husky's acquisition was done with very little debt relative to equity, and the company has paid back significant debt in the interim.

Instead, it's a story of a nice bit of operating performance that increased margins significantly at the company even as it rode through a rough manufacturing recession. A bit of help from good timing in the markets didn't hurt either.

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Revenues are down for Husky since 2008 to the tune of 12.6 per cent, according to Onex's year-end reporting. But cost cuts reduced cost of sales by 30 per cent in the same time.

Onex agree to buy Husky in September, 2007, and completed the deal in December of that year, just as credit markets were getting very tough and private equity was starting to largely go dormant.

Onex and the investors in its buyout funds started with about $620-million invested in Husky, but there's only $524-million left after Onex took out $98-million in a return of capital.

Onex acquired Husky for about $1-billion, and at that point the company had only about $380-million of debt.

While Onex has taken out dividends, it has also paid down debt at Husky. As of March 31, 2010, the company had $247-million of debt, just 1.6 times earnings before interest, taxes, depreciation and amortization. (Given Onex's track record, it's probably paid back more since.)

Now, with private equity firms back in a buying mood as credit markets loosen up, Onex is close to selling Husky to Berkshire Partners for $2-billion, according to Reuters.

Assuming Onex gets $2-billion, even after paying back the debt on Husky, Onex would have proceeds of more than $1.75-billion. Add the $98-million dividend, and that's $1.85-billion of cash coming back on an initial investment of $620-million.

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