|American Capital Invests $104 Million in Tensar|
Bethesda, MD - November 10, 2005 - American Capital Strategies Ltd. (Nasdaq:ACAS) announced today it has invested $104 million to support the acquisition of The Tensar Corporation, a current portfolio company, by an affiliate of Arcapita Bank B.S.C. Tensar is a full-service provider of specialty products and engineering services used for site development and transportation and environmental infrastructure. American Capital's new investment takes the form of senior second lien debt and junior subordinated debt and facilitates Arcapita's acquisition of Tensar from KRG Capital Partners. AIG Global Investment Group is investing alongside American Capital in the junior subordinated debt. Credit Suisse First Boston underwrote a senior first lien term loan as well as a revolving credit facility. American Capital and AIG were existing investors in the Company.
American Capital first invested $19.75 million in Tensar in December 2000 in support of the acquisition of Tensar (then known as Atlantech International) by KRG Capital Partners. In April 2004, American Capital was repaid its original $18.75 million debt investment while retaining its equity investment. In December 2004, American Capital invested $24 million in senior subordinated notes and junior subordinated debt in support of the recapitalization of Tensar. At that time, KRG Capital Partners was the lead investor. American Capital has now received net proceeds of $43 million for the full repayment of the senior subordinated notes, junior subordinated debt and sale of its equity interest, realizing a gain of $11 million in the fourth quarter and earning a combined 27% compounded annual rate of return, including all fees, interest and principal received over the life of American Capital's investment. The amount realized by American Capital was equal to the third quarter 2005 valuation of the investment.
"Our additional investment in Tensar clearly demonstrates our long-term commitment to our portfolio companies and the strong partnerships we develop with management teams," said American Capital Chief Operating Officer Ira Wagner. "This is also an excellent opportunity to leverage our deep understanding of Tensar, its business, industry and growth strategy, as well as work with Arcapita, a new private equity sponsor relationship for us. This is our 12th new sponsor relationship in North America in 2005 and our 15th worldwide."
American Capital has invested over $3.7 billion in the last twelve months, $3 billion year to date and $338 million quarter to date. For more information about American Capital's portfolio, click here.
"Tensar is the only company in the soil stabilization industry to offer a complete package of pavement, earth retention and foundation systems, giving it a strategic advantage in customer development and retention," said American Capital Managing Director Jeff MacDowell. "Since our initial investment in 2000, Tensar has consistently performed well, generated impressive financial results and held its leading market position in the biaxial grid, uniaxial grid and erosion control products markets. In addition, the Company's strong management team has successfully integrated two strategic acquisitions, proving their commitment and ability to significantly expand the Company. We look forward to supporting Tensar's management team as they build on their vision of creating a one-stop-shop for site development and transportation infrastructure solutions."
"The soil stabilization industry is expected to continue to grow in the foreseeable future as the nation's infrastructure ages and transportation needs continue to increase," said American Capital Vice President John Drennan. "The recent extension of the Transportation Equity Act for the 21st Century, a federal funding plan for highway and transit programs, will provide significant opportunities for Tensar as pent-up demand for transportation projects is filled. In addition, Tensar's geogrid products have been approved for use in a wide variety of state highway specifications, which will enable it to capitalize on these favorable industry dynamics."
Founded in 1983 and based in Atlanta, GA, Tensar is the largest manufacturer of polymeric earthwork geogrid reinforcement products in the world. Geogrids permit cheaper, faster and more durable construction of transportation and environmental infrastructure projects, including roadways, parking lots, retaining walls and coastal protection systems. Tensar holds over 70 patents worldwide, including a method of use patent that provides the Company exclusive rights for use of its UXTM and BXTM geogrids for all civil construction applications in the U.S. The Company is also a full-service provider of specialty products and engineering services used for cost-effective site development of commercial, residential, industrial and municipal properties as well as in transportation and environmental infrastructure. Tensar's customers include municipal, county and state departments of transportation and environmental regulatory agencies, as well as customers from the commercial and industrial sectors. Tensar employs over 300 people in its four operating divisions: Tensar Earth Technologies, the largest manufacturer of polymeric earthwork reinforcement products in the world; North American Green, the leading manufacturer and wholesaler of erosion control products in the U.S.; Geopier Foundation Company, a provider of patented Rammed Aggregate Pier intermediate foundation systems; and Tensar Polytechnologies, a manufacturer and marketer of products used in containment, separation and reinforcement applications.
"American Capital's familiarity with Tensar and their flexible financing solution made them a compelling partner for this transaction. They, along with our other investment partners, truly bring an added value to our investment," said Arcapita Director Stockton Croft. "We're pleased to work with all our investment parties as Tensar continues with its growth strategy, expanding into business sectors that complement its stabilization and reinforcement applications and further increase its value proposition."
For more information about American Capital's previous investments in Tensar click here.
ABOUT AMERICAN CAPITAL
American Capital is a publicly traded buyout and mezzanine fund with capital resources of approximately $6.8 billion. American Capital invests in and sponsors management and employee buyouts, invests in private equity buyouts, provides capital directly to private and small public companies and through its asset management business is a manager of debt and equity investments in private companies. American Capital provides senior debt, mezzanine debt and equity to fund growth, acquisitions and recapitalizations.
As of October 31, 2005, American Capital shareholders have enjoyed a total return of 419% since the Company's IPO - an annualized return of 22%, assuming reinvestment of dividends. American Capital has paid a total of $868 million in dividends and paid or declared 19.08 dividends per share since its August 1997 IPO 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 our website.
ABOUT ARCAPITA BANK B.S.C.
Arcapita is a global investment firm with offices in Atlanta, London and Bahrain. Arcapita's main lines of business include corporate investment (private equity and venture capital), real estate investment and asset based investment. Arcapita's private equity line of business was founded in 1997 and operates out of Atlanta and London. Since 1998, Arcapita's private equity professionals have arranged for equity investments of more than $1.1 billion in 18 transactions with an aggregate enterprise value of over $2.4 billion.
SOURCE: American Capital Ltd.
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 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.
This announcement is neither an offer to sell nor a solicitation to buy securities.