BY DON SHILLING

By DON SHILLING
VINDICATOR BUSINESS EDITOR
HE COMPANY THAT PROvides steam heat to downtown Youngstown expanded into Detroit last year and is on the verge of growing again.
Youngstown-based Thermal Ventures II is studying more acquisitions and plans to add a new system every year, said Jeff Bees, company president and chief executive.
Bees declined to say anything about potential additions other than that the company isn't afraid to take on systems that need new investment to improve their operations and efficiency. Such deals take about a year to review, he said.
Company history
The parent company of Youngstown Thermal has the money to buy other heating systems because of a partnership created in 2000 with Yorktown Energy Partners, a New York investment firm that handles endowment money for some major universities.
Yorktown owns a controlling interest in Thermal Ventures II, which was a new entity created for the purpose of expansion. Yorktown wanted to expand its investments and liked the local company's expansion plans, Bees said.
Thermal Ventures II was created out of Thermal Ventures Inc., which was founded by Carl Avers and Lewis Mahoney.
The original company remains but has moved its headquarters to Akron, where it operates a steam heating system for much of downtown. Thermal Ventures Inc. retains a minority ownership interest in Thermal Ventures II.
Mahoney retired in 1999, but Avers continues as chairman of Thermal Ventures Inc. Bees had been general manager of Youngstown Thermal and Akron Thermal before being named the leader of Thermal Ventures II.
He said the agreement that created Thermal Ventures II gives it the option to bring Akron Thermal under its umbrella, but it hasn't yet done that.
Preparation for growth
Avers said, however, that he intends for Thermal Ventures to grow and has just created a management team of people in their mid-40s to lead the company into the future. Avers, 66, said customers sign long-term contracts for steam and want to have stable management in place when they sign such deals.
The Akron company is looking to grow by taking over the heating systems for large industrial plants in the region and throughout Ohio and western Pennsylvania, he said. Thermal Ventures previously had ownership stakes in downtown systems in Pittsburgh and San Francisco but sold those in 1999.
Meanwhile, Thermal Ventures II is looking to expand with more district heating systems such as the ones in Youngstown and Detroit. Youngstown's system serves about 50 customers, while Detroit's system has about 135 customers with 250 buildings.
Youngstown Thermal also has a cooling system with four customers.
Bees said now is a good time to grow because utilities that operate steam systems around the country are reconsidering their investments in those systems. Some utilities are preferring to invest in natural gas exploration instead of upgrading steam systems because of the rising cost of natural gas, he said.
In limbo
Thermal Ventures II also owns steam systems that heat two industrial plants, although company officials are less interested in such systems going forward, Bees said.
The future of both systems is up in the air, he said. One is at a manufacturing plant in Tennessee, which may be closed by the manufacturer. The other is at an industrial park in Virginia which has lost its largest tenant.
Thermal Ventures II also is looking to sell two hotel heating systems it owns in Orange County, Calif. It bought the systems in 2000 to serve hotels that were expected to develop in the area. The development didn't occur, so the company intends to sell the systems to owners of the hotels where they are located, Bees said.
Thermal Ventures II, which has about $50 million in annual sales, has its headquarters at Penguin Place at North Champion Street and East Rayen Avenue. The former telephone company and university classroom building was renovated by Leslie Cochran, former Youngstown State University president, and his wife, Lin.
Thermal Ventures II has nine employees in the top floor of the building and is trying to lease the bottom floor. The company has 120 employees throughout all of its systems.
The Youngstown system has about six miles of steam lines that range in diameter from three inches to 18 inches.
Youngstown Thermal's plant between Belmont and North avenues at the edge of downtown uses coal to fuel boilers that make steam. Pressurized steam is taken from the plant to the heating system of a building, where the steam raises the temperature of a coil in a heat exchanger. The heat is then distributed by ducts in the building.
shilling@vindy.com