Exits, Repayments, Gains, and Losses Press Release
|American Capital Receives Proceeds of $59 Million from Five Exits|
Bethesda, MD - October 29, 2004 - American Capital Strategies Ltd. (Nasdaq:ACAS) announced today it has received proceeds of $59 million from the partial or full exits of five portfolio companies, resulting in a net realized loss on these investments of $0.3 million during the third quarter of 2004 and earning 18%, 20%, 39%, 42% and 46% compounded annual returns on these investments, including all fees, interest and principal received over the life of American Capital's investments in these companies.
Erie County Plastics Corporation
In 1999, American Capital invested $10 million in subordinated debt with warrants of Erie County Plastics Corporation to support the company's growth strategy. Erie Plastics is a nationally recognized leader in the manufacture of custom injection molded plastic packaging components, serving some of the best known names in the consumer products industry. In the third quarter of 2004, American Capital completely exited its investment in Erie Plastics through the full repayment of its $10 million subordinated debt investment and the sale of its common stock warrants for $1.8 million, realizing a total gain of $1.3 million and earning an 18% 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 Erie investment click here.
Riddell Sports Group Inc.
In 2003, American Capital invested $23 million in Riddell Sports Group Inc., a leading designer, manufacturer and licensor of branded sporting goods, reconditioning services and collectibles. American Capital's investment took the form of senior subordinated debt and equity and supported the acquisition of Riddell by Fenway Partners Inc. In September 2004, Riddell acquired Bell Sports, a leading designer, developer and marketer of helmets for bicycling and action sports. As part of the acquisition, American Capital's $20 million subordinated debt investment was paid in full, earning a 20% compounded annual rate of return, including all fees, interest and principal received over the life of American Capital's debt investment in the company. American Capital retains its 2.4% fully diluted equity interest in Riddell. For more information about the Riddell investment click here.
In March 2004, American Capital invested $27 million to support the acquisition of T-NETIX Inc., a leading provider of telecommunications products and services to correctional facilities. American Capital's investment took the form of senior and junior subordinated debt and common equity, and supported the acquisition of T-NETIX by H.I.G. Capital in a going private transaction. During the third quarter of 2004, American Capital received full repayment of its $26 million subordinated debt investment in T-NETIX, realizing a gain of $0.3 million and earning a 39% compounded annual rate of return, including all fees, interest and principal received over the life of American Capital's debt investment in the company. American Capital retains its 2.6% fully diluted equity interest in T-NETIX. For more information about the T-NETIX investment click here.
Baran Group Ltd.
American Capital has exited its common stock investment in Baran Group Ltd., a publicly traded company that provides engineering, technology and construction solutions, realizing a loss of $2.2 million in the third quarter. Over the life of its investment in the company, American Capital has realized a total gain of $2.1 million, earning a 42% compounded annual rate of return on its investment, including all fees, interest and principal received.
In 1999, American Capital invested $13 million in senior subordinated debt with warrants in o2 Wireless Solutions Inc. (formerly Clear Communications Group). In August 2000, o2 Wireless completed an initial public offering. In conjunction with the offering, o2 Wireless repaid American Capital's $13 million debt investment in full and American Capital sold a portion of its stock in the company, realizing a total gain of $4.3 million. In November 2002, o2 Wireless merged with Baran Group Ltd. American Capital has now sold the Baran Group stock it received in this merger. For more information about the investment click here.
American Capital has completely exited its investment in DigitalNet Inc., a publicly traded federal IT and managed network services company, by selling its common stock investment for total proceeds of $0.8 million in the third quarter of 2004. In March 2003, American Capital invested $14.5 million in DigitalNet in senior subordinated bridge notes and common stock warrants. In July 2003, DigitalNet issued high yield notes and repaid American Capital's debt investments in full, resulting in American Capital realizing a gain of $0.7 million. In October 2003, DigitalNet completed an initial public offering. Over the life of American Capital's investment in the company, it realized a total gain of $0.8 million, earning a 46% compounded annual rate of return on its investment including all fees, interest and principal received.
For a chart listing American Capital's exited portfolio companies click here.
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.
As of September 30, 2004, American Capital shareholders have enjoyed a total return of 291% 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 $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 $4.2 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, 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 or national economic conditions, or changes in the conditions of the industries in which American Capital has made investments.
SOURCE: American Capital Ltd.www.americancapital.com
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