Bethesda, MD - November 21, 2003 - American Capital Strategies Ltd. (Nasdaq:ACAS)announced today it has invested $39 million in the recapitalization of Chronic Care Solutions Inc., ("Chronic Care") a leading national direct-to-consumer, mail-order chronic illness supply company focused primarily on diabetic supplies. American Capital's investment takes the form of senior subordinated debt and junior subordinated debt with warrants. In addition, Antares Capital, Merrill Lynch Capital and Key Bank are providing $47 million of senior credit facilities, including a revolving credit facility and senior term loans. The recapitalization is being completed simultaneously with a complementary add-on acquisition. Post-closing, KRG Capital Partners will maintain its majority ownership position in Chronic Care.
"Our investment in Chronic Care is our seventh investment with KRG Capital, and we are pleased to support this platform company in its recapitalization and continuing acquisition strategy," said American Capital COO Ira Wagner. "We are confident in the strong leadership of Chronic Care's management team and KRG Capital, who have jointly driven exceptional growth, building Chronic Care into a national leader over the past several years."
American Capital has invested more than $850 million in the past twelve months and more than $700 million this year.
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"Chronic Care's recurring revenue business model, focused on the continuous supply of high-quality branded products for the management of chronic illnesses, makes it an excellent investment opportunity for American Capital," said American Capital Managing Director Darin Winn. "The recapitalization provides Chronic Care with a substantially improved capital structure and greatly enhances the Company's ability to complete strategic add-on acquisitions. We believe that Chronic Care is well-positioned to meet the challenges presented by the increasing prevalence of chronic illnesses that is being driven by the aging US population. By providing only the highest quality testing supplies and pharmaceuticals, Chronic Care helps both patients and healthcare payors, including Medicare, Medicaid and private insurance carriers, use proactive testing, monitoring and treatment to slow the onset of costly side effects that can result from mismanagement of chronic diseases."
Founded in 1994, Clearwater, FL-based Chronic Care Solutions serves patients in the United States and Puerto Rico under the business names Diabetic Supply of USA, Respiratory Supply of USA, Rx Supply of USA, and Ostomy Supply of USA. The Company sells a full line of diabetic, respiratory, ostomy and urological products, including glucose meters, test strips, lancets, insulin pumps, inhalers and nebulizers, all of which are high quality branded products from leading manufacturers such as Johnson & Johnson, Roche and Bayer, and serve a customer base of approximately 70,000 patients. Chronic Care also has a mail-order pharmacy, licensed in all 50 states, that provides its patients with a full line of prescription drugs. Chronic Care employs over 200 people and has experienced a compounded annual sales growth rate of over 40% since 2001.
"American Capital has once again proven to be the ideal investment partner, providing the necessary capital to bring this transaction to close," said KRG Capital Partners Managing Director Mark King. "We look forward to working with American Capital and our other investment partners in expanding Chronic Care's product offering and supporting management's vision of building a premier chronic disease management company."
As of October 31, 2003, American Capital shareholders have enjoyed a total return of 207% since the Company's IPO -- an annualized return of 20%, assuming reinvestment of dividends. American Capital has paid or declared a total of $13.06 per share in dividends since its August 1997 IPO at $15 per share.
American Capital is a publicly traded buyout and mezzanine fund with capital resources in excess of $2 billion. American Capital is an equity partner in management and employee buyouts; invests in private equity sponsored buyouts, and provides capital directly to private and small public companies. American Capital provides senior debt, mezzanine debt and equity to fund growth, acquisitions and recapitalizations.
Companies interested in learning more about American Capital's flexible financing should contact Mark Opel, Principal, at (800) 248-9340, or visit our website.
KRG Capital specializes in acquiring and recapitalizing unique and profitable middle-market companies. Through its $450 million Fund II, KRG seeks investment opportunities where the KRG professionals can work in concert with the owners and operating managers who are committed to expanding their companies and becoming industry leaders.
This press release contains forward-looking statements. 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.
