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Bethesda, MD - September 10, 2004 - American Capital Strategies Ltd. (Nasdaq:ACAS)announced today it has received prepayments of debt investments of $25 million by two portfolio companies, realizing $1.2 million in gains. American Capital also announced that it has completely exited another portfolio company, receiving $6 million in repayments and realizing a $7.3 million loss on its investment, which had previously been depreciated and on non-accrual status.
Since its August 1997 IPO through second quarter 2004, American Capital has earned a 15% compounded annual return on 68 exits and prepayments of senior debt, subordinated debt and equity, totaling $976 million of invested capital, including interest payments, dividends, fees and net realized gains on these investments. These exits and prepayments represent 28% of all amounts invested by American Capital since its August 1997 IPO. Proceeds from these exits and prepayments exceeded the associated prior quarter valuation of the investments by $36 million in aggregate, or 5%. Twenty-three percent of these exits and prepayments were from portfolio companies that had at one time been either a loan grade 1 or 2 in American Capital's four point loan grading system, with 1 being the lowest loan grade. Since its IPO through the second quarter of 2004, $29 million of American Capital's accrued payment-in-kind (PIK) interest and dividends and accreted original issue discount (OID) have been repaid, representing 21% of all PIK and OID.
Nancy's Specialty Foods Inc.
In September 2003 American Capital invested $15 million in Nancy's Specialty Foods Inc., a leading producer of frozen gourmet quiche entrées, appetizers and desserts. American Capital's investment took the form of senior subordinated debt and supported the recapitalization of Nancy's by Kohlberg & Co. In July 2004, the company prepaid its debt in full. American Capital earned a 28% compounded annual rate of return on its investment including all fees, interest and principal received over the life of American Capital's investment in the company.
For more information about the Nancy's transaction, go to: http://www.ACAS.com/our_portfolio/companies/company.cfm?p_comp=111
"Our investment in Nancy's and collaboration with Kohlberg was a tremendously positive experience," said American Capital Principal John Thornton. "We are pleased to have supported the growth of an excellent company and look forward to working with Kohlberg and Nancy's again."
Roadrunner Freight Systems Inc.
In July 2003, American Capital invested $33 million in the acquisition of Roadrunner Freight Systems Inc., a transportation services company based in Milwaukee, WI. American Capital's investment took the form of senior and junior subordinated debt with warrants and common equity. In August 2004, the company prepaid $10 million of American Capital's senior subordinated note as a result of a refinancing by its existing senior lender, resulting in a gain of $1.2 million for American Capital.
For more information about the Roadrunner transaction, go to: http://www.ACAS.com/our_portfolio/companies/company.cfm?p_comp=108
"Roadrunner's prepayment is a result of its strong operating and financial performance, the general strengthening of the senior debt markets and the confidence of their existing senior lender," said American Capital Principal Jon Isaacson. "We are pleased to be a part of Roadrunner's success story."
Fulton Bellows & Components Inc.
In March 2000, American Capital invested in the buyout of Fulton Bellows & Components Inc. Fulton Bellows was a newly formed corporation that purchased several operating divisions and product lines of Robertshaw Controls Company, a subsidiary of Invensys. Subsequently, American Capital invested additional funding for working capital and to finance the acquisition of certain assets of Standard-Thomson Company. In June 2003, Fulton Bellows filed for Chapter 11 bankruptcy, and in July 2004 the U.S. Bankruptcy Court approved a cash sale of Fulton to a third party investor. In August 2004, American Capital received net proceeds from the sale of $6 million, realizing a loss of $7.3 million on its remaining investments in Fulton. As of June 30, 2004, American Capital's remaining debt investments in Fulton were carried at a fair value of $6 million and were on non-accrual. Over the life of its investment in the company, American Capital has realized a total loss of $25 million in Fulton resulting in a negative compounded rate of return of 26% on its investment including all fees, interest and principal received.
For a chart detailing American Capital capital gains and losses as of the end of the most recent quarter, go to: http://www.ACAS.com/investor_relations/capital_gains.cfm
For a chart listing American Capital's exited portfolio companies go to: http://www.ACAS.com/our_portfolio/exited_companies.cfm
As of August 31, 2004, American Capital shareholders have enjoyed a total return of 281% since the Company's IPO -- an annualized return of 21%, assuming reinvestment of dividends. American Capital has paid a total of $524 million in dividends and paid or declared $15.24 dividends per share since its August 1997 IPO at $15 per share.
American Capital is a publicly traded buyout and mezzanine fund with capital resources over $3.6 billion. American Capital is an investor in and sponsor of 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, Senior Vice President, Business Development, at (800) 248-9340, or visit our website at www.AmericanCapital.com. 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.
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