Bethesda, MD -- American Capital Strategies, Ltd. (Nasdaq:ACAS) today announced that it has agreed to invest $10 million in the form of senior subordinated debt with detachable warrants in A.H. Harris & Sons, Inc., the largest distributor and rental center of concrete-related construction supplies in New England. At closing, $5 million of the commitment will be drawn down. A.H. Harris intends to use the proceeds of American Capital's investment to finance future acquisitions in order to further expand its leadership in its core markets and enter new markets.
American Capital President and Chief Operating Officer Adam Blumenthal stated, "A.H Harris represents another example of our strategy of adding strong investments to our portfolio by partnering with experienced management teams and proven private equity investors. Mellon Ventures, which is a leading equity sponsor in Harris' region, has shown a long-term commitment to A.H. Harris, and we are pleased to join them as partners in building this outstanding company. With the investment in A.H. Harris, American Capital has successfully added 15 companies to its portfolio in the past year, and has committed over $148 million to strong middle market companies over that time."
Joseph Bute, the American Capital Principal who structured and led this investment, said, "The A.H. Harris investment underscores our commitment to partnering with companies that service America's heartland. Robert Parsons and his team are taking a fragmented industry and effectively consolidating it through consistent performance and superior customer service."
A.H. Harris was founded in 1916 and is solidly positioned in a market that is estimated at $44 billion. It is anticipated to grow through meeting the projected steadily growing demand generated by U.S. transportation infrastructure development. It is strategically positioned in diverse regional markets and is actively pursuing incremental regional diversification. The company markets more than 3,000 products to a customer base that includes both regional and national contractors and provides substantial value-added consulting business to its regional contractors. Among A.H. Harris' competitive advantages are its breadth of products, long-term relationships with its core suppliers and customers, solid market share and experienced management team.
Robert Parsons, President and Chief Operating Officer of A.H. Harris stated, "Our decision to partner with American Capital reflects their long-term investment philosophy and expertise in positioning middle market companies for growth. We have been successful in building a strong brand and achieving a higher growth rate than our industry average. American Capital's resources and expertise will enable us to build upon our past accomplishments and further enhance our leadership in the construction supply industry."
A.H. Harris & Sons, Inc. is the largest distributor and rental center of concrete related construction supplies (tools, forming equipment, chemicals, fasteners, etc.) in New England with growing market positions in the Northeast and Middle Atlantic regions. Harris markets products from 200 vendors, including private label products. The company sells to contractors in all three segments of construction - residential, commercial and non-building/infrastructure. About half of all the company's sales are in highway-related projects (45% in 1998), with the remaining in commercial/industrial (45%) and residential (10%). Mellon Ventures, the venture capital affiliate of Mellon Financial Corporation, is the principal equity holder in A.H. Harris.
American Capital is a buyout and specialty finance company with capital resources exceeding $460 million. American Capital invests senior debt, subordinated debt and equity in businesses in need of capital for growth, acquisitions, ESOP buyouts, management buyouts, Internet development, liquidity and restructurings. Through www.Capital.com/, financing is provided for receivable and inventory financing, working capital loans, machinery and equipment loans, real estate loans, construction financing, acquisition funding, management buyouts, ESOP financings, Internet development, liquidity and restructurings.
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Companies interested in learning more about American Capital's flexible financing and ability to provide senior debt, subordinated debt and equity should contact Mark Opel, Principal, at (800) 248-9340, or visit our website.This press release contains forward-looking statements that are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. The statements regarding expected results of American Capital Strategies are subject to various factors and uncertainties, including the uncertainties associated with the timing of transaction closings, changes in interest rates, availability of transactions, changes in regional or national economic conditions, or changes in the conditions of the industries in which American Capital has made investments.
