|American Capital Provides Details of $70 Million of Total Net Portfolio Realized Gains in Third Quarter 2007|
Bethesda, MD – December 12, 2007 – American Capital Strategies Ltd. (Nasdaq: ACAS) announced today the details of its $70 million of total net realized gains from the disposition of portfolio investments in the third quarter of 2007. During the third quarter of 2007, American Capital received $1.5 billion of proceeds from the realization of portfolio investments.
The following is a summary of the third quarter 2007 proceeds, net realized gains, and cumulative compounded annual rate of returns for American Capital’s third quarter 2007 realizations (in millions):
ASAlliances Biofuels LLC
In the third quarter of 2007, American Capital realized a gain of $43 million from the sale by its portfolio company, ACSAB LLC, of its investment in ASAlliances Biofuels LLC to VeraSun Energy Corporation (NYSE: VSE) for cash and VeraSun stock. ASAlliances Biofuels is a developer of three large-scale ethanol production facilities. In the fourth quarter of 2006, American Capital sold 30% of its interest in ACSAB LLC to American Capital Equity I LLC realizing an additional gain of $18 million for a total inception to date gain of $61 million. American Capital earned a 97% compounded annual rate of return on its total investment, including interest, dividends and fees earned over the life of American Capital’s investment. The proceeds received by American Capital were less than the second quarter 2007 valuation of the investment by $11 million, or 9%.
In February 2006, American Capital committed to invest $85 million in the project financing of ASAlliances Biofuels. American Capital's investment took the form of senior subordinated debt and preferred equity.
“ASAlliances Biofuels provided an exciting opportunity for American Capital’s Energy Group to lead the project financing of three ethanol production plants in the rapidly growing ethanol market. In only 18 months, our investment has resulted in a profitable outcome for American Capital,” said Kevin Kuykendall, Managing Director, American Capital Energy Group. “VeraSun has grown to become the largest independent ethanol producer in the U.S. and we believe that ASAlliances Biofuels, with its three strategically located large-scale production facilities, is a perfect match.”
For more information about the ASAlliances Biofuels investment, please go to www.americancapital.com/our_portfolio/companies/asalliances.html.
Bushnell Outdoor Products
In the third quarter of 2007, American Capital realized full repayment of its $117 million debt investment in Bushnell Outdoor Products, an industry leader in sports optics, premium eyewear and outdoor accessories for over 50 years. American Capital earned a 15% compounded annual rate of return on its total investment, including interest and fees earned over the life of American Capital’s investment.
In August 2005, American Capital invested $117 million in senior and junior subordinated debt to support Bushnell's acquisition of Michaels of Oregon Co., a leading manufacturer and marketer of accessories for the hunting, shooting sports and law enforcement industries. The investment was led by Bushnell’s majority owner, Wind Point Partners.
“We are pleased that we had the opportunity to support Wind Point Partners and Bushnell in a transaction that enabled the company to augment its market position and pursue exciting growth opportunities,” said Todd Wilson, American Capital Principal.
For more information about the Bushnell transaction, please go to www.americancapital.com/our_portfolio/companies/bushnell.html.
A.H. Harris & Sons Inc.
In the third quarter of 2007, American Capital sold its remaining investment in A.H. Harris & Sons Inc. consisting of common stock warrants for $2.5 million. A.H. Harris & Sons is a New England distributor and rental center of concrete-related construction supplies. American Capital realized a gain of $2 million upon the exit in the third quarter of 2007. Previously in the fourth quarter of 2006, American Capital had received full repayment of its $10 million subordinated debt investment. American Capital earned a 16% compounded annual rate of return on its total investment, including interest and fees earned over the life of American Capital’s investment. The proceeds received by American Capital equaled the second quarter 2007 valuation of the investment.
In December 1999, American Capital invested $5 million in senior subordinated debt with warrants in A.H. Harris & Sons. Subsequently in October 2000, American Capital invested another $5 million of senior subordindated debt with warrants in A.H. Harris & Sons.
“Working with the A.H. Harris management team has been especially gratifying,” said Darin Winn, American Capital Regional Managing Director.
For more information about the A.H. Harris transaction, please go to www.americancapital.com/our_portfolio/companies/ah_harris.html.
Forest Alaska Operating LLC
In the third quarter of 2007, American Capital received full repayment of its $37.5 million second lien term debt investment in Forest Alaska Operating LLC, a subsidiary of Forest Oil Corporation (NYSE: FST), an oil and gas company engaged in the acquisition, exploration, development and production of reserves primarily in North America. American Capital earned a 16% compounded annual rate of return on its investment, including interest and fees earned over the life of American Capital’s investment.
In December 2006, American Capital invested $37.5 million in a second lien term loan to support the establishment of Forest Alaska as an unrestricted subsidiary of Forest Oil.
“Less than a year ago, the combined efforts of American Capital’s Energy Group and Second Lien Group with respect to Forest Oil’s recapitalization of its Forest Alaska subsidiary enabled American Capital to make its first investment into the oil and gas exploration and production sector. Since that time, we have made a second debt investment in the sector and continue to pursue numerous debt and equity investment opportunities in this large and important subset of the overall energy arena,” said Kevin Kuykendall, Managing Director, American Capital Energy Group.
For more information about the Forest Alaska transaction, please go to www.americancapital.com/our_portfolio/companies/forest_alaska.html.
Kirby Lester LLC
In the third quarter of 2007, American Capital received full repayment of its senior and subordinated debt investments and an affiliate of American Capital sold its equity investment in Kirby Lester LLC as a result of a recapitalization of Kirby Lester. Kirby Lester is a leading developer and manufacturer of pill counting machines for retail and chain pharmacies in the United States and Canada. American Capital received $25 million of proceeds upon the exit, earning a 16% compounded annual rate of return on its total investment, including interest and fees earned over the life of American Capital’s investment.
In September 2005, American Capital and an affiliate invested $26 million in Kirby Lester to support the acquisition of Kirby Lester by private investors, Kirby Lester management and Garry Zage, Kirby Lester's then newly appointed President and CEO. American Capital’s investment took the form of a one stop debt financing solution and consisted of a revolving credit facility, a senior term loan, senior subordinated debt and participating preferred equity.
“We’re pleased with our investment in Kirby Lester and glad that American Capital’s one stop debt financing proved to be meet the capital needs of the Company’s management team and private investors,” said Bowen Diehl, American Capital Managing Director, Sponsor Finance.
For more information about the Kirby Lester transaction, please go to www.americancapital.com/our_portfolio/companies/kirby_lester.html.
Milton’s Fine Foods Inc.
In the third quarter of 2007, American Capital received full repayment of its $8.5 million senior subordinated debt investment in Milton’s Fine Foods Inc., a leading branded food products company in the fresh baked bread, gourmet cracker and frozen dinner entrée categories. American Capital earned an 18% compounded annual rate of return on its total investment, including interest and fees earned over the life of American Capital’s investment.
In April 2005, American Capital invested $8.5 million in senior subordinated debt to support the recapitalization of Milton's led by Red Diamond Capital Partners LP.
“With our investment in Milton’s, we were able to establish a new relationship with private equity sponsor Red Diamond Capital Partners and support them in Milton’s recapitalization,” said Bowen Diehl, American Capital Managing Director, Sponsor Finance. “We hope to work with them again in the future on similarly attractive investments.”
For more information about the Milton’s Fine Foods transaction, please go to www.americancapital.com/our_portfolio/companies/miltons_baking.html.
Seroyal International Holdings Inc.
In the third quarter of 2007, American Capital received full repayment of its remaining debt investments in Seroyal International Holdings Inc., a leading marketer and distributor of branded nutritional supplements and homeopathic medicines to healthcare professionals in Canada and the U.S. American Capital received $12 million of proceeds upon the repayment in the third quarter of 2007, earning a 21% compounded annual rate of return on its debt investments, including interest and fees earned over the life of American Capital’s debt investment. American Capital continues to own a minority equity interest in Seroyal.
In December 2004, American Capital invested $36 million in support of Bruckmann, Rosser, Sherrill & Co. LLC's recapitalization of Seroyal. American Capital's investment took the form of a senior term A loan, senior term B loan, senior subordinated debt and preferred and common equity. Subsequent to the initial investment, American Capital syndicated the $16 million senior term A loan.
“Since our investment in 2004, Seroyal has performed well, growing its sales in both the U.S. and Canadian markets,” said Brian Graff, American Capital Regional Managing Director. “We’re delighted to still hold our equity interest in Seroyal.”
For more information about the Seroyal transaction, please go to www.americancapital.com/our_portfolio/companies/seroyal.html.
Other Company Exits and Repayments
American Capital previously announced that it recognized a gain of $43 million in the third quarter 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.
American Capital previously announced that it sold its investments in 121 subordinated tranches of bonds in 22 CMBS trusts to ACAS CRE CDO 2007-1, Ltd., a new commercial real estate collateralized debt obligation trust in the third quarter of 2007. American Capital realized a net loss of $22 million on the transaction.
American Capital also recognized net realized gains of $4 million from the realization of various other portfolio investments during the third quarter of 2007.
A chart showing internal rate of return by static pool is below:
* Assumes investments are exited at current fair value.
Since its August 1997 IPO through the third quarter of 2007, American Capital has earned a 16% compounded annual return, including interest, dividends, fees and net gains, on 215 realizations of senior debt, subordinated debt and equity investments, totaling $8 billion of invested capital. These realizations represent 42% of all amounts invested by American Capital since its August 1997 IPO. Proceeds from these realizations exceeded the total associated prior quarter valuation of the investments by 1%. American Capital earned a 30% compounded annual return on the exit of its equity investments, including dividends, fees and net gains.
For a chart showing American Capital’s exited portfolio companies, please go to www.americancapital.com/our_portfolio/exited.html.
ABOUT AMERICAN CAPITAL
American Capital is the only alternative asset management company that is a member of the S&P 500. With $19 billion in capital resources under management, American Capital is the largest U.S. publicly traded private equity fund and one of the largest publicly traded alternative asset managers. American Capital, both directly and through its global asset management business, is an investor in management and employee buyouts, private equity buyouts, and early stage and mature private and public companies. American Capital provides senior debt, mezzanine debt and equity to fund growth, acquisitions, recapitalizations and securitizations. American Capital and its affiliates invest from $5 million to $800 million per company in North America and €5 million to €500 million per company in Europe.
As of November 30, 2007, American Capital shareholders have enjoyed a total return of 511% since the Company's IPO, an annualized return of 19%, assuming reinvestment of dividends. American Capital has paid a total of $1.9 billion in dividends and paid or declared $26.16 dividends per share since going public in August 1997 at $15 per share.
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 www.AmericanCapital.com or www.EuropeanCapital.com.
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 press release contains forward-looking statements. The statements regarding expected results of American Capital 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.
SOURCE: American Capital Ltd.www.americancapital.com