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Bethesda, MD - December 17, 2004 - American Capital Strategies Ltd. (Nasdaq:ACAS)announced today it has received net proceeds of $43 million from the full or partial exits of two portfolio companies, realizing a gain of $11 million.
Texstars Inc.
American Capital has realized a gain of $11 million from the sale of its portfolio company Texstars Inc. to Hampson Industries PLC. American Capital received total proceeds of $34 million upon the exit, earning a 27% compounded annual rate of return on its investment in senior notes, senior subordinated notes and common equity interest. The 27% return includes the realized gain and the interest and fees received over the life of American Capital's investment in the company. The sale proceeds recognized by American Capital include proceeds to be held in escrow to secure standard representations and warranties of the sale of approximately $2 million. The amount realized by American Capital exceeded the third quarter 2004 valuation of the investment by $1.3 million, or 4%.
In June 2001, American Capital invested $25.5 million to fund the buyout of Texstars. Texas-based Texstars is the leading supplier of canopies for the F-16 fighter aircraft, the most widely used U.S. fighter aircraft. The canopy is the clear structure that wraps around the pilot. Texstars is a leading supplier of polycarbonate canopies for many military aircraft applications. In addition, Texstars manufactures other components for both military and non-military aircraft and for mass transit applications.
Money Mailer LLC
American Capital has received full repayment of its $8.5 million senior subordinated debt investment in Money Mailer LLC, earning a 20% compounded annual rate of return on the debt investment, including all fees, interest and principal received over the life of American Capital's debt investment in the company. American Capital continues to retain a 5% fully diluted equity ownership in the parent of Money Mailer.
In June, 2003 American Capital invested $10 million in senior subordinated debt and common equity in Money Mailer, a leading shared mail direct marketing company serving local and national advertisers. American Capital's investment was used to finance partially the purchase of Money Mailer by Roark Capital Group. Money Mailer is one of the leading direct mail advertising companies in the United States. Founded in 1979, the company has built a successful franchise network that enables small businesses and service providers, as well as large national companies, to combine their advertising in a single mail package and cost effectively reach local consumers.
Since its August 1997 IPO through third quarter 2004, American Capital has earned a 15% compounded annual return on 75 exits and prepayments of senior debt, subordinated debt and equity investments, totaling $1.1 billion of invested capital, including interest payments, dividends, fees and net 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 $38 million in aggregate, or 4%. Twenty-two 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 third quarter of 2004, $34 million of American Capital's accrued payment-in-kind (PIK) interest and dividends and accreted original issue discount (OID) have been repaid, representing 22% of all PIK and OID.
ABOUT AMERICAN CAPITAL
American Capital is a publicly traded buyout and mezzanine fund with capital resources of more than $4.8 billion. American Capital is an investor in and sponsor of management and employee buyouts, invests in private equity 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.
As of November 30, 2004, American Capital shareholders have enjoyed a total return of 299% since the Company's IPO - an annualized return of 21%, assuming reinvestment of dividends. American Capital has paid a total of $583 million in dividends and paid or declared $15.97 dividends per share since its August 1997 IPO at $15 per share.
Companies interested in learning more about American Capital's flexible financing should contact Mark Opel, Principal and Senior Vice President, Business Development, at (800) 248-9340, or visit our website.
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, national or international economic conditions, or changes in the conditions of the industries in which American Capital has made investments.
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