|American Capital Outlines Structure of European Capital|
Bethesda, MD - June 12, 2005 - American Capital Strategies Ltd. (Nasdaq:ACAS), a buyout and mezzanine investment company, announced today plans with regard to the structure and financing of its European affiliates, which operate as European Capital.
European Capital will invest in and sponsor management and employee buyouts, invest in private equity buyouts and provide capital directly to private and mid sized public companies. European Capital intends to invest from €5 million (US$6 million) to €125 million (US$153 million) per transaction in equity, mezzanine debt and senior debt to fund growth, acquisitions and recapitalizations.
European Capital's investment activities are expected to be conducted by European Capital S.A., which will be organized as a Société d'Investissement en Capital á Risque (Sicar), under the laws of Luxembourg. European Capital S.A. will be a wholly owned subsidiary of European Capital Ltd., which will be organized under the laws of Guernsey.
A wholly-owned affiliate of American Capital, European Capital Financial Services Ltd., which is organized under the laws of England, will serve as the manager of both European Capital S.A. and European Capital Ltd. and will enter into a management agreement with each of these entities. Under these management agreements, European Capital Financial Services will provide certain personnel, advisory services, management systems and facilities for the operation of these businesses and in return is expected to receive certain fees and expense reimbursements. Included in the fees are expected to be a periodic fee tied to the amount of assets under management, fees tied to fees earned in transactions and a participation interest in realized capital gains. Like American Capital, European Capital intends to distribute approximately 100% of its operating income to its shareholders as dividends and retain its capital gains.
American Capital intends to provide a majority of the initial committed equity capital for European Capital Ltd., which is targeted to be approximately €600 million (US$740 million). The balance is expected to be raised privately from third party institutional investors. The equity commitments are expected to be drawn down by European Capital over a two to three year period to fund its investments and operations in the ordinary course of business. European Capital is also expected to borrow funds in support of its investing activities and American Capital may provide direct loans to European Capital or limited credit enhancements for certain of its borrowings from other parties. European Capital Ltd. may eventually undertake a public offering of its equity securities.
ABOUT AMERICAN CAPITAL
American Capital is a publicly traded buyout and mezzanine fund with capital resources of approximately $5.2 billion. American Capital has invested in over 170 portfolio companies. American Capital invests in and sponsors management and employee buyouts, invests in private equity 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.
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, 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