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NewStar Financial Leads Recapitalization For Milton's Baking Company

NewStar works with Red Diamond Capital Partners to meet client needs

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Boston, MA, April 4, 2005 - NewStar Financial, Inc. ("NewStar"), a Boston-based commercial finance company, announces that it has provided recapitalization financing to Milton's Baking Company, a leading branded food products company in the fresh baked bread, gourmet cracker, and frozen dinner entree categories. The Company is majority owned by Red Diamond Capital Partners, a private equity fund that invests in middle-market manufacturing, distribution and service businesses in North America.

NewStar provided $15.5 million in senior secured facilities comprising a $7.0 million revolver and an $8.5 million term loan for the recapitalization. American Capital also provided $8.5 million of subordinated debt capital.

"This transaction allowed us to put NewStar's expertise, flexibility, and resources to work on behalf of our partners," said NewStar Chief Executive Officer Tim Conway. "The successful completion of this recapitalization will make Milton's a stronger and more competitive company."

NewStar's deal team for the transaction included David Dobies, Andre Paquette, Pem Covington and Michael Purcell.

Founded in 1996, Milton's Baking Company is based in Del Mar, California and also operates MBR Foods. Both companies are formulators and marketers of branded, high quality healthy food products. Milton's customers include national club, specialty and grocery stores.

About NewStar Financial, Inc.:

NewStar Financial, Inc. was formed in June 2004 by a group of senior banking and capital markets executives from leading financial institutions, including FleetBoston Financial, Citigroup and JP Morgan Chase, and leading institutional investors including Capital Z Partners, JP Morgan Corsair Capital Partners and Och-Ziff Capital Management Group. NewStar is focused exclusively on providing customized financing solutions to mid-sized borrowers in three lending groups: Middle Market Corporate, Commercial Real Estate, and Structured Products. For more information, please contact the appropriate individual below.

Corporate Inquiries:
NewStar Financial
Scott Poirier
(617) 848-2525

Press-Related Inquiries:
Gaffney Bennett Public Relations
Chris Riley
(860) 690-0856

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