|American Capital Realizes 38% Annual Return and $9.5 Million Gain on Investment in Par Systems|
Bethesda, MD - May 14, 2004 - American Capital Strategies Ltd. (Nasdaq:ACAS) announced today that it has partially exited its investment in ACAS Acquisitions (PaR Systems), Inc. and its wholly-owned subsidiary, PaR Systems Inc., earning a 38% compounded annual return and realizing a $9.5 million gain. The 38% return includes the realized gain and the interest and fees received over the life of American Capital's investment in the company. The partial exit has resulted from the purchase of a 81% interest in PaR's nuclear equipment and services business by Westinghouse Electric Company. PaR's non-nuclear robotics business was not sold to Westinghouse. American Capital and management have retained a 19% interest in the nuclear business and 100% ownership of the non-nuclear robotics business. As part of the transaction with Westinghouse, the PaR shareholder group has the ability to sell the remaining 19% of the nuclear business to Westinghouse after a specified period of time for the greater of a formula based on earnings or a set minimum value. There are also additional amounts of conditional proceeds that the selling shareholders may realize over the next several years. Proceeds from the sale and a senior credit facility provided by Wells Fargo Bank were used to repay PaR's senior credit facility (provided by GMAC Commercial Finance), American Capital's subordinated debt, and a liquidating dividend to PaR's shareholders, representing a partial return of American Capital's equity investment.
"With this transaction the business will be in the best position to continue growth, while PaR's shareholders have realized an excellent return from their sale of 81% of the nuclear segment to the company's global strategic partner, Westinghouse. American Capital's creativity and the commitment of our management team made this transaction possible," noted PaR's CEO, Mark Wrightsman.
The non-nuclear business segments of PaR were contributed to a newly created company, which was renamed PaR Systems as of the closing. Shares in PaR Systems were distributed to the existing shareholders of PaR. American Capital provided $4.6 million subordinated debt financing to PaR Systems, and retains a 57% diluted ownership interest in PaR Systems, which provides advanced remote handling and automation technology to environmental remediation, aerospace and material handling markets.
"We are excited about this next chapter for PaR. The environmental and robotics business has been growing at double digit rates despite the recession and has plenty of runway ahead of it; in addition, the transaction structure enables us to continue to participate in the growth of the nuclear segment," said David Ehrenfest Steinglass, Managing Director, American Capital.
In March 2002, American Capital invested $36 million in the buyout of PaR, funding a revolving credit facility, senior term loan, senior and junior subordinated notes with warrants and common equity. PaR management reinvested much of their existing equity in the company. In April 2002, GMAC Commercial Finance funded a senior credit facility, the proceeds of which were used to repay the revolving credit facility and senior term loan provided by American Capital at the March closing.
For a chart listing American Capital's exited portfolio companies click here.
Since its August 1997 IPO through the first quarter of 2004, American Capital has earned a 14% compounded annual return on 60 exits and prepayments of senior debt, subordinated debt and equity, totaling $713 million of invested capital, including interest payments, dividends, fees and net realized gains and losses on these investments. These exits and prepayments represent 25% of all amounts invested by American Capital since its August 1997 IPO. Thirty-one percent of these exits and prepayments were from portfolio companies that had at one time been either a loan grade 1 or 2 in its four point loan grading system, with 1 being the lowest loan grade.
As of April 30, 2004, American Capital shareholders have enjoyed a total return of 213% since the Company's IPO - an annualized return of 19%, assuming reinvestment of dividends. American Capital has declared a total of $14.52 per share in dividends since its August 1997 IPO.
American Capital is a publicly traded buyout and mezzanine fund with capital resources in excess of $2.7 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, 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