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American Capital Announces Half Billion Dollar Share Repurchase Plan and Updates Guidance
In December, American Capital announced that its Board of Directors approved a share repurchase plan. Under this plan, American Capital may repurchase up to a half billion dollars of its common stock at prices below its net asset value as reported in its then most recently published financial statements.
American Capital anticipates that share purchases will be made from time to time, depending upon market conditions. Shares may be purchased in the open market, including through block purchases, or through privately negotiated transactions. American Capital does not intend to repurchase any shares from directors, officers or other affiliates of American Capital. The repurchase program does not obligate American Capital to acquire any specific number of shares and may be discontinued at any time.
American Capital intends to fund the repurchases with available cash. The repurchase program is expected to be in effect through December 31, 2008, or until the approved dollar amount has been used to repurchase shares.
“With less than 0.8:1 debt to equity, American Capital has one of the best capitalized balance sheets of any public financial institution,” said Malon Wilkus, American Capital Chairman, CEO and President. “We received approximately $5.7 billion of repayments and realizations from our portfolio last year, $3.8 billion since the start of the credit crunch, and we are reinvesting this capital at great risk adjusted returns. This is many times more capital available for reinvestment than most of our competitors have as capital. With such liquidity, we believe that acquiring up to a half billion dollars of our shares at prices below American Capital’s net asset value will be accretive to our earnings per share and net asset value per share and will also provide a great risk adjusted return to our shareholders and enhance our ability to grow dividends. We will do this while continuing to make outstanding investments in some of the best middle market companies. We are pleased to have a strong capital base with great liquidity in an environment where many financial institutions are compelled to raise capital on unfavorable terms.”
For the complete release, click here.
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November Equity Offering Totals $158 Million
In November, American Capital closed a public offering of 4 million shares of its common stock at $39.43 per share (the “Offering Price”). All of the shares were borrowed and sold by Morgan Stanley & Co. Incorporated, Bear, Stearns & Co. Inc. and UBS Investment Bank or certain of their respective affiliates (the “Counter-Parties” and each, a “Counter-Party”) in connection with agreements between the Counter-Parties and American Capital (the "Forward Sale Agreements"). The Forward Sale Agreements provide for the purchase by the Counter-Parties of an aggregate 4 million shares of common stock from American Capital at a future date at the Offering Price, less certain adjustments. American Capital will receive the proceeds from the sale of common stock pursuant to the Forward Sale Agreements, which initially are valued at $158 million, at a future date upon settlement.
In addition, American Capital granted the underwriters an option to purchase up to an additional 600,000 shares of common stock to cover over-allotments to be sold directly by the Company, which was exercised in part in December 2007.
Morgan Stanley & Co. Incorporated, Bear, Stearns & Co. Inc. and UBS Investment Bank are joint book-running managers for the offering. RBC Capital Markets Corporation, Ferris, Baker Watts, Incorporated and Morgan Keegan & Company, Inc. are the co-managers for the offering.
This newsletter is neither an offer to sell nor a solicitation of an offer to buy shares of common stock. The offering of securities can be made only by means of a prospectus and a related prospectus supplement.
For the complete release, click here.
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American Capital Raises $585 Million Equity Fund; Continues to Expand Asset Management Business
In October, American Capital raised its second private equity fund, the $585 million American Capital Equity II LP. The transaction further expanded American Capital’s asset management business and further diversified its investor base, adding six new private equity limited partners. AIG Investments, the asset management arm of American International Group, Inc. (AIG), led the transaction with a consortium of investors including Landmark Partners, Paul Capital Partners, Lehman Brothers Secondary Opportunities Fund and SVG Advisers Limited.
For the complete release, click here.
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American Capital Invests in the One Stop Buyout™ of CIBT Holdings
In January, American Capital sponsored and invested in the One Stop Buyout™ of its portfolio company CIBT Holdings, Inc., the world's largest expeditor of short-term visas, passports and other documents for business and leisure travel. American Capital’s new investment took the form of a senior term loan, senior and junior subordinated debt and convertible preferred and common equity. American Capital is also providing a revolving credit facility and an acquisition facility. CIBT management invested equity in the company.
American Capital first invested in CIBT in May 2006, providing $74 million in a revolving line of credit, unitranche term debt and an acquisition facility to support Audax Group’s acquisition of CIBT. American Capital’s previous $74 million investment was fully repaid in connection with the buyout. For more information about American Capital’s initial investment in CIBT, click here.
Founded in 1989, CIBT operates 28 locations in four countries. It is the largest travel document expeditor in the U.S., U.K. and Germany, which are, respectively, the three largest outbound travel markets worldwide. CIBT expedites the procurement of visas, passports, international driver's licenses and other specialized documents and also rents global cellular and satellite phones. The company processes documents for a large and diverse customer base including Fortune 500 companies, major travel management companies, tour operators, cruise lines and large government agencies. In 2007, the company processed over 800,000 visas, passports and other travel documents. CIBT is based in McLean, VA.
For the complete press release, click here.
Contact Sean Eagle, Principal, Buyout Group, at (301) 951-6122.
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American Capital Invests $66 Million in Avalon Laboratories
In January, American Capital invested $66 million in Avalon Laboratories, Inc., the leading supplier of disposable cardiopulmonary vascular cannulae, medical devices that provide connections between patients and life support machines. American Capital’s investment will be used to fuel Avalon’s growth and took the form of a senior term loan, senior subordinated debt and convertible preferred and common equity. American Capital is also providing a revolving credit facility. Robert Foster, Avalon Founder, CEO and Chairman, will maintain an ownership interest and continue his role at Avalon.
Founded in 1990 and headquartered in Rancho Dominguez, CA, Avalon Laboratories is the leading supplier of cardiopulmonary vascular cannulae in the world, manufacturing more than three-quarters of all wire reinforced venous and arterial cannulae used globally. Cardiopulmonary vascular cannulae are critical disposable components that connect patients to heart and lung machines and other support devices. Avalon combines science, technology and innovation to provide the highest quality cannulae to help medical professionals deliver superior health care and save lives.
For the complete press release, click here.
Contact Kimberly Reed, Principal, Buyout Group, at (310) 806-6280.
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American Capital Invests in One Stop Buyout™ of NECCO
In December, American Capital invested in the One Stop Buyout™ of New England Confectionery Company (“NECCO”), the oldest multi-line confectioner in the U.S. with well-recognized, nostalgic brands such as Sweethearts® Conversation Hearts, NECCO® Wafers, Clark® Bar, Haviland® and Mary Jane®. American Capital’s investment took the form of a senior secured term A loan, a senior secured real estate term loan and preferred and common equity. American Capital is also providing a revolving credit facility. American Capital partnered with Clear Creek Capital LLC and Domenic M. Antonellis, President and CEO of NECCO and a 40-year veteran of NECCO and the candy industry, in the investment.
NECCO was founded in 1847 by Oliver Chase, who invented the first American candy machine. Today, NECCO produces a full line of staple and seasonal candies, including Sweetheart® Conversation Hearts, the number one U.S. Valentine’s Day candy, from its Revere, MA and Pewaukee, WI facilities. The company’s customers include many of the world’s largest mass merchandisers, supermarkets, drug store chains and dollar stores.
For the complete press release, click here.
Contact Myung Yi, Managing Director, Special Situations Group, at (301) 951-6122.
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American Capital Invests in Formation of SunFuel Midstream
In November, American Capital invested in the formation of SunFuel Midstream, which will acquire, build, finance and operate midstream biofuel infrastructure assets.
SunFuel Midstream, to be based in Dallas, TX, will acquire, build, finance and operate biofuel infrastructure assets such as biofuel storage and blending terminals, rail, barge and truck receiving logistics terminals and rail and truck gathering logistics terminals. The company will derive its revenues by charging throughput and storage fees for use of its infrastructure and by blending biofuel for its own account.
For the complete press release, click here.
Contact Kevin Kuykendall, Managing Director, Energy Group, at (214) 273-6634.
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American Capital Invests in One Stop Buyout™ of Dynojet
In November, American Capital invested in the One Stop Buyout™ of Dynojet Research, Inc., a developer of after-market performance products and diagnostic tools for the motorcycle and automotive industries. American Capital's investment took the form of a senior term loan, senior subordinated debt and convertible preferred and common equity. American Capital also provided a revolving credit facility. Dynojet management invested equity in the Company. Dynojet was a portfolio company of Graham Partners prior to American Capital's investment.
Established in 1972 and based in Las Vegas, Dynojet is a research and development company, employing over 160 people in Montana, Nevada, Holland, Germany and England. Dynojet provides aftermarket performance enhancing parts and accessories, diagnostic equipment and software for the motorcycle, power sports and automotive markets. The company's customer base totals over 9,450 dealers, service and repair shops, alternative distributors and racing teams.
For the complete press release, click here.
Contact Frank Do, Managing Director, Buyout Group, at (310) 806-6280.
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American Capital Invests $11 Million in Sixnet for Add-On Acquisition
In November, American Capital and its affiliates invested $11 million in its portfolio company SIXNET Holdings, LLC to support the acquisition of BlueTree Wireless Data Inc., a leading supplier of machine to machine (M2M) cellular data products. SIXNET is a leading manufacturer of process automation, Ethernet connectivity and landline modem products used in harsh industrial, commercial and military applications. American Capital’s investment took the form of an increase in its unirate loan and additional common stock. American Capital Equity Fund I LLC and American Capital Equity II LP, funds managed by American Capital, respectively provided 30% and 16.7% of the American Capital equity investment. Riverside Partners LLC and SIXNET CEO Steve Schoenberg also invested additional equity in SIXNET to support the acquisition.
Founded in 2002, BlueTree Wireless is a leading developer and manufacturer of wireless modems and software solutions for commercial and industrial applications. BlueTree Wireless's modems are designed to operate on cellular networks worldwide enabling M2M applications in the public safety, fleet management, field service, supervisory control and data acquisition (SCADA) and telemetry markets. Its main offices are located in Montreal, Québec and Chapel Hill, North Carolina.
For the complete press release, click here.
Contact Frank Do, Managing Director, Buyout Group, at (310) 806-6280.
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American Capital Invests in One Stop Buyout™ of Rug Doctor
In November, American Capital invested in the One Stop Buyout™ of Rug Doctor, L.P., the largest manufacturer and marketer of premium steam cleaning carpet care machines rented and sold to consumers. American Capital’s investment took the form of a revolving credit facility, first lien senior term loan, senior and junior subordinated debt, holding company notes and preferred and common equity. Rug Doctor’s management team also invested equity in the business.
Rug Doctor was founded in 1972 by Roger Kent, who built the first machine in his garage. Since then, Rug Doctor has grown to become a household name and continues as the leading carpet care rental system with innovative products. Rug Doctor now rents machines to over six million consumers annually through approximately 42,000 retails outlets. Additionally, there are over 40 licensees of Rug Doctor products. In 2006, Rug Doctor was recognized by the Carpet and Rug Institute (CRI) and awarded its prestigious Gold standard as the only consumer-operated system to pass CRI’s rigorous standards in removing dirt particles from carpet fibers. Rug Doctor is located in Plano, Texas and currently has over 700 employees worldwide.
For the complete press release, click here.
Contact Jeff MacDowell, Managing Director, Buyout Group, at (214) 273-6633.
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American Capital Invests $112 Million in One Stop Buyout™ of Imperial Supplies
In October, American Capital invested $112 million in the One Stop Buyout™ of Imperial Supplies LLC, a value-added distributor of after-market components to fleet and facility-based markets. American Capital’s investment took the form of a senior term loan, senior and junior subordinated debt and preferred and common equity. American Capital also provided a revolving credit facility. Imperial management is investing in preferred and common equity. Post close, American Capital owns a majority of the Company with Imperial management owning a minority stake. Imperial Supplies was a portfolio company of Norwest Equity Partners prior to American Capital’s investment.
Founded in 1958, Imperial distributes over 20,000 high margin products across 15 maintenance, repair and operations categories including electrical products, chemicals and paint, air brake products, vehicle parts and accessories and fasteners. Employing a call-center based model, Imperial serves more than 7,250 customers in 14 major end markets including truck rental/lease, private fleets and parcel carriers. Headquartered in Green Bay, WI, Imperial also has distribution facilities in Green Bay, Charlotte, NC, Reno, NV, and Dallas, TX and call centers at its headquarters and in De Pere, WI.
For the complete press release, click here.
Contact Gregg Newmark, Managing Director, Buyout Group, at (312) 681-7400.
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American Capital Commits $150 Million to Portfolio Company First Capital to Support Growth
In December, American Capital provided a $150 million commitment of senior subordinated debt financing to support the growth of its portfolio company First Capital, a leading provider of secured, working capital financing for middle market companies. American Capital’s investment replaced its $50 million senior subordinated debt investment in First Capital made in August 2006.
First Capital is a leading commercial financial services firm providing prompt, professional and reliable working capital solutions and outsourcing primarily for middle-market companies and institutions. With over $1 billion in total committed lines, First Capital is one of the largest independent and fastest-growing commercial finance companies in the United States. The firm focuses on asset-based lending, accounts receivable management, credit protection, international supply chain financing and servicing for clients in North America and Asia. The firm also manages asset portfolios for clients and is an active issuer of receivables-backed securities. Combining a unique blend of traditional and progressive banking methods, First Capital provides clients with customized support needed to grow and maintain their business. Based out of West Palm Beach, Florida, the firm has six full-service offices in major cities including New York, Los Angeles, Ft. Lauderdale, Oklahoma City and Atlanta and a subsidiary that is headquartered in Hong Kong.
For the complete press release, click here.
Contact Bob Grunewald, Managing Director, Financial Services Group, at (301) 951-6122.
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American Capital Provides $50 Million Financing for Republic Financial Corporation’s Special Assets Group
In December, American Capital provided a $50 million acquisition line to Republic Financial Corporation, an investment firm with four primary business groups: Special Assets, Structured Finance, Private Equity and Aviation. American Capital’s investment took the form of a secured acquisition facility, which was used to refinance existing debt, provide growth capital to certain Republic portfolio companies and provide the Special Assets Group with financing for future acquisitions.
Based in Aurora, CO, Republic has investment interests in a diverse pool of operating companies and assets, specializing in aviation, equipment leasing portfolios, private equity, structured finance transactions and distressed commercial debt. Since being founded in 1971, Republic has invested in assets and businesses totaling over $1 billion, achieving commercial success by developing creative solutions to difficult and complex business situations.
For the complete press release, click here.
Contact Myung Yi, Managing Director, Special Situations Group, at (301) 951-6122.
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American Capital Invests $11.5 Million in Portfolio Company HomeAway to Support Growth and Additional Add-On Acquisition
In October, American Capital announced that on August 27 it invested an additional $11.5 million in its portfolio company HomeAway Inc. to support HomeAway’s continued growth, which includes the recent acquisition of Owners Direct Holiday Rentals, an online vacation rental listing marketplace based in the U.K. With the acquisition of Owners Direct, HomeAway strengthens its market position as the world leader in online “for-rent-by-owner” vacation home rentals. American Capital’s investment took the form of a senior term unirate loan.
American Capital first invested in HomeAway in 2006 and again in February 2007. HomeAway’s portfolio of vacation rental websites includes HomeAway.com, VRBO.com, VacationRentals.com, CyberRentals.com, Holiday-Rentals.co.uk, GreatRentals.com, A1Vacations.com, FeWo-direkt.de, TripHomes.com, VacationVillas.net, Abritel.fr, HolidayRentals.fr, as well as OwnersDirect.co.uk. HomeAway enables property owners and managers to list properties available for rental on any or all of its websites by submitting online descriptions, photos, pricing, availability, contact and other information. Formed in 2005, HomeAway is headquartered in Austin, TX and maintains a call center in Hardy, VA, European headquarters in Acton, U.K., and offices in Kassel, Germany and Marseilles, France.
Founded in 1997, the Ashtead, U.K.-based Owners Direct Holiday Rentals operates an online vacation rental listing marketplace for primarily European properties. Owners Direct’s website features over 17,000 paid online listings with detailed property information and photographs.
For the complete press release, click here.
Contact Virginia M. Turezyn, Managing Director, Technology Group, at (650) 289-4561.
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American Capital Commits $60 Million to US Express Leasing
In December, American Capital announced that in the third quarter it committed $60 million in senior subordinated debt to US Express Leasing, Inc., an independent equipment leasing company that provides financing to the healthcare, technology, office products, graphic arts and commercial and industrial equipment markets. American Capital’s investment was used to support USXL’s continued growth.
USXL originated its first lease in May 2004 and has since grown its portfolio to include more than 25,000 end users originated through relationships with over 400 equipment vendors. The Parsippany, NJ-based equipment leasing company originates transactions through dealers, distributors and manufacturers.
For the complete press release, click here.
Contact Bob Grunewald, Managing Director, Financial Services Group, at (301) 951-6122.
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American Capital Achieves a Total Gain of $77 Million from its Investment in Ranpak; Provides $410 Million to Support Odyssey Investment Partners' Acquisition
In December, American Capital realized a gain of $45 million from the sale of its portfolio company Ranpak Inc. to Odyssey Investment Partners LLC. American Capital’s inception to date total realized gain on its investment in Ranpak was $77 million. Including the investments in Ranpak of American Capital’s affiliated funds under management, the gain totals $104 million over the life of the investment.
Ranpak is a leading manufacturer and marketer of “in-the-box” paper-based protective packaging in North America, Europe and the Pacific Rim. In support of Odyssey Investment Partners’ acquisition of Ranpak, American Capital invested $410 million in the form of first and second lien loans and is also providing a revolving credit facility. Odyssey Investment Partners and Ranpak management invested in the Ranpak equity.
American Capital acquired control of Ranpak in December 2005, investing $284 million in subordinated debt and equity. American Capital has realized total gains on its investment in Ranpak of $77 million, earning a 31% compounded annual rate of return on its senior debt, subordinated debt and equity investments, including interest, dividends and fees earned over the life of its investment. On its equity only investments, American Capital earned a 40% compounded annual rate of return, including dividends and fees earned over the life of its investment.
For the complete press release, click here.
Contact: Todd Wilson, Principal, Buyout Group, Robert Klein, Managing Director, Buyout Group or Chris Carey, Principal, Sponsor Finance Group, at (212) 213-2009.
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American Capital Recognizes $43 Million Q3 Gain From Sale of Portfolio Company SAV Holdings; Provides $48 Million Financing to Purchaser
In August, American Capital realized a gain of $43 million from the sale of its portfolio company SAV Holdings Inc., the parent of Swank Audio Visuals Inc. to Code Hennessy & Simmons LLC. Swank is a leading provider of audio visual services for corporate meetings and events. American Capital invested $48.5 million to support Code Hennessy & Simmons’ acquisition of Swank in the form of a second lien senior term B loan. Code Hennessy & Simmons and Swank management invested in the equity
American Capital acquired control of Swank in November 2005, investing $58 million in senior term loans, senior subordinated debt and preferred and common equity. American Capital has now realized a gain on its investment in Swank of $51 million, earning a 68% compounded annual rate of return on its investment, including interest, dividends and fees earned over the life of its investment. Together with an affiliate, the American Capital group realized an inception to date aggregate gain of $60 million from the exit, earning an aggregate 68% compounded annual rate of return on their investments, including interest, dividends and fees earned over the life of their investments. Together, American Capital and its affiliate realized approximately three times their original equity investment in Swank, with an aggregate equity IRR of 109%. The proceeds received by American Capital were less than its second quarter 2007 valuation of the investment by $6 million, or 6%.
Founded in 1937, Swank is the nation’s second largest outsourced provider of audio visual equipment and related technical support services to prominent hotels and resorts in 58 major markets in the United States, Canada and Mexico. Through long-term contracts with premium hotels and resorts, Swank provides a range of services including event consultation, creative event design, technical support, equipment rental and post-production services to end users, typically consisting of large corporations, associations and other interest groups. Swank provides services to hundreds of prominent hotels in North America including well-known brands such as Four Seasons, Hyatt, Hilton, Marriott, and Ritz Carlton. Swank also provides event services outside of its hotel business. Headquartered in St. Louis, MO, Swank maintains 13 facilities across the country and has more than 1,000 employees.
For the complete press release, click here.
Contact: Jon Leiman, Principal, Buyout Group, at (312) 681-7400.
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Performance data quoted above represents past performance of American Capital. Past performance does not guarantee future results and the investment return and principal value of an investment in American Capital will likely fluctuate. Consequently, an investor's shares, when sold, may be worth more or less than their original cost. Additionally, American Capital’s current performance may be lower or higher than the performance data quoted above.
This newsletter 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 and international economic conditions, and changes in the conditions of the industries in which American Capital has made investments. This newsletter is neither an offer to sell nor a solicitation of an offer to buy shares of common stock. The offering of securities can be made only by means of a prospectus and a related prospectus supplement.
Two Bethesda Metro Center
14th Floor
Bethesda, MD 20814
Phone: (301) 951-6122
Fax: (301) 654-6714
Info@AmericanCapital.com
Nasdaq: ACAS
www.AmericanCapital.com
(800) 248-9340
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In October, American Capital provided financing for Audax Group’s acquisition of Nivel Holdings LLC, a leading designer and distributor of a broad range of aftermarket golf car replacement parts and accessories. Nivel was previously owned by Sentinel Capital Partners. American Capital's one stop financing package took the form of a revolving credit facility, an acquisition facility, a senior unirate loan and a common equity co-investment.