Earnings and Dividends Press Release
|American Capital Provides Additional Information on Dividend|
Bethesda, MD – June 22, 2009 – American Capital Ltd. (Nasdaq: ACAS) (the “Company”) announced today that it is providing answers to frequently asked questions (“FAQs”) concerning its June 11, 2009 dividend declaration. A new section entitled “Cash-Stock Dividend” has been added to the FAQs on the Investor Relations website at: http://www.americancapital.com/investor_relations/FAQs/index.html.
1.Why is American Capital distributing a portion of the dividend in shares of its common stock?
This dividend includes the balance of American Capital’s 2008 taxable income, which is required to be distributed to stockholders in order for American Capital to maintain its tax status as a regulated investment company and to eliminate its income tax liability. The IRS issued a Revenue Procedure allowing publicly traded regulated investment companies, such as American Capital, to distribute, with respect to a taxable year ending on or before December 31, 2009, its own stock as a dividend for the purpose of fulfilling its distribution requirements if, among other things, the aggregate amount of cash that may be distributed to their stockholders is at least 10% of the total dividend. The Investment Company Act of 1940, as amended (the “Act”) could prohibit American Capital from paying any cash dividend when its asset to debt coverage as determined under the Act is less than 200% and it has public bonds outstanding. However, the staff of the Securities and Exchange Commission has provided the Company with no-action relief to the effect that American Capital may declare and pay a cash dividend in these circumstances, provided that the cash portion does not exceed the 10% cash minimum required by the IRS Revenue Procedure.
2.When do I need to purchase shares of American Capital common stock by in order to receive the dividend?
The stock must have been purchased prior to the ex-dividend date, which was June 18, 2009. Only stockholders of record on June 22, 2009 will receive the dividend, which is payable on August 7, 2009.
3.What income is included in the dividend?
The $1.07 dividend declared on June 11, 2009, includes the Company’s remaining 2008 taxable income, which is required to be distributed to stockholders prior to September 30, 2009, in order for the Company to eliminate its income tax liability, as well as a portion of estimated 2009 taxable income. Upon payment of the dividend, the Company will have met its distribution requirements for its 2008 taxable income.
4.If I hold my shares with a broker, bank or nominee will I receive an election form? Who should I contact with questions regarding the dividend?
The Company will mail a letter with additional information regarding the distribution election and an election form only to registered stockholders. (Registered stockholders are those who own their stock directly in certificate form, and not through a bank, broker or nominee.) Therefore, if you hold your shares through a broker, bank or nominee, you will not receive an election form from the Company. You should contact such broker, bank or nominee with any questions that you may have regarding the dividend, as they will be responsible for submitting the dividend election on your behalf.
5.As a financial advisor, how do I make an election for my client accounts?
You should contact the Dividend or Corporate Actions Department of your bank or brokerage to discuss how to make an election for your client accounts.
6.If I am a registered stockholder, what is my deadline for returning the completed election form to Computershare?
The Company will mail a letter with additional information regarding the distribution election and an election form to registered stockholders promptly after June 22, 2009. The completed election form must be received by American Capital’s transfer agent, Computershare Trust Company, N.A., prior to 5:00 p.m. (EDT) on Friday, July 24, 2009. Registered stockholders with questions regarding the dividend may call our transfer agent, Computershare Trust Company, N.A. at (800) 733-5001.
7.What are my election options?
You are electing to receive the dividend either in shares of American Capital common stock or in cash. If you elect to receive shares, you will receive 100% of your dividend in shares of American Capital common stock. If you elect to receive cash, you will receive your pro rata share of the aggregate cash dividend pool, which is 10% of the aggregate dividend payout, and you will receive shares of American Capital common stock for the balance of your dividend. The exact distribution of cash and stock to each stockholder electing cash will depend on the number of shares held by the stockholders making this election.
8.What if I elect to receive the dividend in shares of American Capital common stock?
You will receive 100% of your dividend in shares of American Capital common stock.
9.What if I elect to receive the dividend in cash?
You will receive your pro rata share of the aggregate cash dividend pool, which is 10% of the aggregate dividend payout. The remainder of your dividend that is not paid in cash will be paid in shares of American Capital common stock. The exact distribution of cash and stock to each stockholder electing cash will depend on the number of shares held by the stockholders making this election.
10. What if I do not make an election?
The default for registered stockholders if no election is made is for your dividend to be paid in shares of common stock, so you will receive 100% of your dividend in shares of American Capital common stock. It is possible that if you hold your shares through a broker, bank or nominee, that the broker, bank or nominee will make a different election on your behalf.
11.What if a fractional share results from my election?
You will be issued a fractional share of American Capital common stock.
12.What price will be used to determine the number of shares of American Capital common stock comprising the stock portion of the dividend?
The volume weighted average price of American Capital’s common stock on the NASDAQ Global Select Market on July 27, July 28 and July 29, 2009.
13.How will I receive my dividend?
If you receive any portion of your dividend in shares of American Capital stock, the shares issued to you will be credited to your stockholder account in Book-Entry form, meaning you will receive a statement from Computershare or the bank, broker or nominee that holds your shares, showing such credit. Share certificates will not be issued.
If you receive any portion of your dividend in cash, and you are a registered stockholder of American Capital, Computershare, the Company's Dividend Disbursement Agent, will send a check in the amount of your cash dividend to you at the mailing address listed in their records. The check will be mailed to you on August 7, 2009, the dividend payment date. If you hold your shares with a broker, bank or nominee, a check will be mailed to such broker, bank or nominee on the payment date and they are responsible for crediting your account.
14.Will the shares be restricted?
No. The shares will not be restricted.
15.How will my dividend be paid if I am enrolled in a dividend reinvestment plan (DRIP)?
If you are enrolled in the Company’s DRIP, your dividend will be paid to you based on your dividend election notice, subject to the limitations discussed in Question 1 above. For any part of your dividend that is being paid in cash, please see Question 9 above. If you are enrolled in a DRIP program sponsored by your broker, please contact your broker.
16.What will the tax characteristics of the dividend be?
The Company reports the anticipated tax characteristics of each dividend when announced, while the actual tax characteristics of each year’s dividends are reported annually to stockholders on Form 1099DIV. The dividend will be fully taxable to stockholders. The Company anticipates the 2009 declared dividends to date of $1.07 per share to be a distribution of ordinary taxable income.
For further information or questions, please call our Investor Relations Department at (301) 951-5917 or send an email to IR@AmericanCapital.com.
ABOUT AMERICAN CAPITAL
American Capital is a publicly traded private equity firm and global asset manager. American Capital, both directly and through its asset management business, originates, underwrites and manages investments in middle market private equity, leveraged finance, real estate and structured products. Founded in 1986, American Capital has $11 billion in capital resources under management(1) and ten offices in the U.S., Europe and Asia. For further information, please refer to www.AmericanCapital.com.
(1) As of March 31, 2009.
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.
Contact: Investors - (301) 951-5917
SOURCE: American Capital Ltd.www.americancapital.com
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