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2000 Highlights
Shareholders Earn 118% Total Return Since IPO (chart)
Raises Over $250 Million, Capital Resources Now Exceed $750 Million
Subsidiary Issues Asset-Backed Securities
Equity Offerings Raise Approximately $200 Million
Increases Dividend 25% over 1999
Now Listed on Nasdaq Financial 100, Russell 2000
Opens New Offices in Los Angeles and Philadelphia
Makes $275 Milllion in New Investments, Up 56% Over 1999
Fourth Quarter Highlights
$12.0 Million in Buyout Financing of Sunvest Industries
$19.8 Million in Acquisition of Atlantech
$22.7 Million to Recapitalize Lubricating Specialties Company
$32.2 Million to Sponsor Acquisition of Iowa Mold Tooling
$9.0 Million Add-on Investment in Portfolio Company Cycle Gear
Portfolio Company Electrolux LLC Retires Debt Early
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» American Capital Produces a 118% total Return Since its IPO
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$10,000 invested in American Capital on August 30, 1997 would have grown to $21,780 on December 31, 2000, assuming reinvestment of dividends - a 117.8% return.
"I am pleased to report that American Capital has provided a 117.8% total return to our shareholders since our IPO and a 20.8% return for the year 2000, assuming the reinvestment of dividends. This compares to the S&P 500 returns of 46.8% and -10.1% respectively. Considering how difficult it has been to achieve returns in the equity markets, we believe this is a great way to begin the new millennium, " said Malon Wilkus, Chairman and CEO of American Capital.
Total Return to Shareholders
Since IPO 3 years Ended 1 year Ended
(August 1997) December 31, 2000 December 31, 2000
American Capital* 117.8% 78.1% 20.8%
S&P 500 46.8% 36.1% -10.1%
Nasdaq Composite 55.6% 57.3% -39.3%
Nasdaq Financial 100 19.3% -1.7% 11.0%
Russell 2000 14.2% 10.6% -4.2%
Dow Jones 30 Industrials 41.5% 36.4% -6.2%
* Data for American Capital presented assumes reinvestment of all dividends.
Past performance is no guarantee of future results.
Click here to learn more about American Capital. »
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» American Capital Raises Over $250 Million, Capital Resources Now Exceed $750 Million |
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We have raised over $250 million in debt and equity capital this year, including an issuance of investment grade securities backed by $154 million of senior and subordinated business loans and two equity offerings totaling approximately $200 million. Our capital resources now exceed $750 million.
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» American Capital Subsidiary Issues Asset-Backed Securities |
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In the fourth quarter an American Capital subsidiary issued investment grade securities backed by $154 million of senior and subordinated business loans originated by American Capital.
This securitization is an important step in the maturation of our balance sheet. We are now able to layer in term debt to continue to prudently leverage our business. We would expect to reach substantially higher debt to equity levels in the future before having to raise additional equity capital. Access to this diversified funding source also broadens our sources of capital.
The private placement is American Capital's first term securitization. The note
offering to investors consisted of $69.2 million class A notes and $46.2
million of class B notes. $38.5 million of class C notes are not being offered to
investors. We are treating the transaction as a financing on our balance sheet.
The class A and B notes were rated by the rating agencies as follows:
Class of
Note Fitch Moody's S&P
---- ----- ------- ---
A AAA Aaa AAA
B A+ A1 A
The Class A notes were priced at LIBOR plus 45 basis points and the Class B notes were priced at LIBOR plus 150 basis points.
Click here for more information about American Capital's asset-backed securities. »
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» American Capital Equity Offerings Raise Approximately $200 Million in Capital |
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American Capital's two equity offerings this year raised $198 million. In May the Company sold 6.3 million shares of common stock to the public at $20.50 per share. The offering was underwritten by Robertson Stephens, First Union Securities, Inc., A.G. Edwards & Sons, Inc. and PaineWebber Incorporated.
In November the Company sold 3.1 million shares of its common stock at $21.75 per share. Lead underwriter was First Union Securities, Inc. Co-underwriters were Legg Mason Wood Walker Incorporated, BB&T Capital Markets, and Friedman Billings Ramsey.
Investors in the May offering would have enjoyed a 17.2% compounded rate of return if they had sold at the offering price at the time of the November follow-on offering.
Click here for more information. »
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» American Capital Increases Dividend 25% over 1999 |
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Total dividends were $2.17 per share, including an extra dividend of $.22 per share. This is an increase of 25% over 1999.
"We are pleased to have been able to deliver a 25% dividend increase this year," said American Capital Chief Financial Officer John Erickson. "The strong dividend in part is the result of the $4.3 million short-term capital gain from our o2wireless investment. As a Regulated Investment Company, American Capital is required to annually declare a dividend to distribute 98% of its investment company taxable income by December 31st to avoid paying an excise tax. Short-term capital gains are included in investment company taxable income and, unlike a long-term capital gain, may not be taxed and retained by a RIC."
Click here for more information about American Capital's dividends. »
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» Now Listed on Nasdaq Financial 100, Russell 2000 |
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In the past year American Capital's common stock was added to The Nasdaq Financial 100 Index and the Russell 2000. The Nasdaq Financial 100 Index consists of 100 of the largest financial companies listed on the Nasdaq National Market tier of The Nasdaq Stock Market. Membership in the Russell 2000 is determined by market capitalization.
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» American Capital Opens New Offices in Los Angeles and Philadelphia
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On May 1, American Capital announced the opening of a new office in Los Angeles. Jeri J. Harman joined the company as Head of Office and Principal. The new Los Angeles office allows us to build on the California presence we established with our San Francisco office four years ago. We are pleased that our Los Angeles office has already closed on their first investment in late December.
We opened our Philadelphia office, the Company's ninth, in November. Ken Jones joined the company as Principal. Ken's extensive contacts and relationships in the Mid-Atlantic market will help American Capital increase our investment opportunities as we continue our nationwide growth.
MORE »
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» American Capital Makes $275 Million in New Investments, Up 56% over 1999 (chart) |
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Dollar volume of American Capital's new investments increased 56% over 1999. Fourth quarter new investments increased 83% from 1999 to 2000.
Click here for more information about our investments.
American Capital New Investments ($Millions)
1999 2000 % Increase,
1999 - 2000
4Q $57.1 $104.7 83%
3Q 48.4 77.1 59%
2Q 44.3 61.2 38%
1Q 26.2 32.0 22%
-- ---- ---- ---
TOTAL 176.0 275.0 56%
New Investments by Transaction Type ($Millions)
1999 2000 % Increase,
1999 - 2000
American Capital 72.0 106.7 48%
Sponsored Buyouts
Investments in Support 53.9 73.3 36%
of Equity Sponsors
Direct Investments 51.1 95.0 85%
-------------------- ---- ---- ---
TOTAL 176.0 275.0 56%
MORE »
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» American Capital Invests $12.0 Million in Buyout Financing of Sunvest Industries
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In December American Capital invested $12.0 million to finance the establishment of Sunvest Industries LLC, a platform holding company, and its acquisition of two high precision sheet metal fabricators. Our investment took the form of senior term debt, senior subordinated debt with warrants and equity.
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» American Capital Invests $19.8 Million in Acquisition of Atlantech
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| In December American Capital invested $19.75 million in support of the acquisition of Atlantech International Inc. The investment took the form of $18.75 million in senior subordinated debt with warrants and $1.00 million in redeemable preferred stock. Atlantech is a holding company that owns The Tensar Corporation, a manufacturing operation based in Morrow, Georgia, and related manufacturing, sales and marketing entities. KRG Capital Partners L.L.C., a Denver, Colorado based private investment group, was the transaction sponsor.
Tensar is the largest manufacturer of polymeric earthwork geogrid reinforcement products & systems in the world. Geogrids permit cheaper, faster and more durable construction of transportation & environmental infrastructure projects including roadways, parking lots, retaining walls and coastal protection systems.
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» American Capital Invests $22.7 Million in Lubricating Specialties Company
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 In December American Capital invested $22.7 million in the recapitalization of Lubricating Specialties Company, the largest independent manufacturer, blender and marketer of greases and lubricants on the West Coast. The investment took the form of senior debt and senior subordinated debt with warrants. Comerica Bank was the agent for the senior debt.
MORE »
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» American Capital Invests $32 Million to Sponsor Acquisition of Iowa Mold Tooling
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 In October an acquisition company controlled by American Capital acquired Iowa Mold Tooling Co. Inc. from Intermet Corporation (Nasdaq: INMT). IMT is a leading manufacturer of service vehicles, material handling systems and specialty cranes serving the tire, mining, construction, material handling, equipment dealer, railroad and utility markets throughout the world. American Capital provided $32,200,000 in junior capital, consisting of senior subordinated debt with warrants, junior subordinated debt with warrants and common equity. Other equity capital was provided by members of the senior management team of IMT and from Mobile Tool International, an American Capital portfolio company. GMAC Business Credit provided a $31,000,000 senior credit facility. American Capital will have majority control of IMT.
MORE »
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» American Capital Invests $9 Million in Portfolio Company Cycle Gear
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In December we invested $9.0 million in our portfolio company Cycle Gear, a retailer of motorcycle parts and accessories. The investment consisted of senior subordinated debt and preferred stock. Management and directors are
also investing. Cycle Gear will use the proceeds to fund a continuation of their new store rollout strategy. This is in addition to our original $6 million commitment in September 1998. Cycle Gear is an employee-owned company that has grown into the largest multi-store retailer of general motorcycle parts and accessories in the U.S.
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» American Capital Portfolio Company Electrolux LLC Retires Debt Early
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In December American Capital portfolio company Electrolux LLC retired
$9.3 million of subordinated debt owed to American Capital. We realized a
gain on the debt of approximately $235,000 in the second quarter 2000.
American Capital continues to own warrants for 2.5% ownership of the
company. This debt was retired 6 years earlier than its original due date
of 2006.
American Capital originally purchased $7.5 million of Electrolux LLC
subordinated debt along with the warrants in an August, 1998 transaction in
support of Electrolux LLC's acquisition by management and Engles Urso
Follmer, the Dallas-based buyout firm. Electrolux LLC is a manufacturer and
a direct-sales company for floor-care products and other home products.
This newsletter 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.
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