Bethesda, MD - December 17, 2001 - American Capital Strategies Ltd. (Nasdaq:ACAS) announced today that it has invested $38.5 million in Marcal Paper Mills, Inc., a manufacturer and supplier of towel, tissue and napkin products in the northeast U.S. American Capital's investment is in the form of a senior term loan, senior subordinated debt with warrants and a first mortgage loan facility.
"This transaction again demonstrates American Capital's flexibility in investing in different tranches of the balance sheet," said COO Ira Wagner. "Our ability to invest in senior debt where necessary insures that strong middle market companies acquire the capital they need to grow and thrive. We have also invested at low multiples of cash flow in all tranches with unusually strong underlying collateral. In addition, we have introduced Gladstone Capital Corporation (Nasdaq: GLAD) to the transaction, and Gladstone Capital has co-invested with American Capital in two tranches of the transaction. American Capital's investment combined with that of Gladstone Capital totals a formidable $55 million."
Year to date, American Capital has invested more than $360 million in middle market companies.
"American Capital is backing a seasoned management team with a strong brand name in an attractive segment of the paper industry," said Ken Jones, American Capital Principal. "Additionally, while other sectors of the paper industry are notoriously cyclical, the tissue business has been characterized by steady growth in consumption and prices linked to population and household growth as well as higher brand visibility and expanding consumer uses. Marcal's ability to grow and maintain brand loyalty will serve it well as it penetrates new channels and geography."
Marcal products are sold throughout the northeast. The company has seen sales grow over the past several years through increased penetration of the metropolitan New York grocery market, including such well known stores as Acme, Pathmark, Stop 'n Shop and Shop Rite. It also produces private label brands for many well-established chain supermarkets and drug retailers. Marcal enjoys significant national market share in the office superstores market, selling to Staples, Office Max and Office Depot. With 1,200 employees and revenues of approximately $255 million, Marcal is headquartered in Elmwood Park, NJ. Notably, Marcal has manufactured tissue with 100% recycled paper since the 1950s. The company has invested approximately $125 million in new equipment over the past three years, preparing for continued growth.
"American Capital's investment in Marcal allows us to move forward and continue to focus on our one business: tissue products that provide excellent value to consumers," said Nicholas Marcalus, Marcal President and CEO.
Click here for more information about Marcal and its history of innovation.
American Capital is a publicly traded buyout and mezzanine fund with capital resources in excess of $1 billion. American Capital is an equity partner in management and employee buyouts; invests in debt and equity of companies led by private equity firms, and provides capital directly to private and small public companies. American Capital funds growth, acquisitions and recapitalizations. American Capital has paid over $7.00 per share in dividends since going public in 1997.
Companies interested in learning more about American Capital's flexible financing and ability to provide senior debt, subordinated debt and equity 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.
